A Bacs processing error at Royal Bank of Scotland last week caused delays in pension payments to 30,000 members of oil giant Shell’s UK defined benefit schemes.
RBS, which is responsible for paying all Shell Contributory Pension Fund and Shell Overseas Contributory Pension Fund members, advised Shell that payments due on January 4 would be credited to accounts a day late.
A spokesperson from Shell said: “We are working closely with RBS to ensure it doesn’t happen again.”
Emergency action can be initiated immediately if it is pre-planned
Margaret Snowdon, JLT
A spokesperson from RBS said: "Due to a processing issue, payments to a number of Shell pensioners were credited a day late. We are very sorry for any inconvenience this may cause and are working closely with Shell to ensure there are no financial consequences as a result of the delay."
Bacs, which stands for the Bankers’ Automated Clearing Service, is owned and controlled by the UK’s largest banks and building societies and facilitates the electronic processing of millions of financial transactions across the UK.
Bacs issues
In August, banking giant HSBC failed to complete 275,000 payments ahead of the bank holiday weekend after a flawed file derailed the Bacs system.
Anne-Marie Winton, partner at law firm ARC Pensions Law, said these types of errors are “embarrassing” for the banking sector.
“The one sector who knows how to transit payments properly is the banking sector… it’s hugely embarrassing to admit that [Bacs] is not 100 per cent accurate,” she said.
Business continuity
Margaret Snowdon, director at consultancy JLT Employee Benefits, said it is important for scheme trustees and their administrators to have a plan to deal with interruptions to business, whether caused by internal or external events.
“Trustees should… seek evidence that such plans are in place and tested regularly,” she said.
“Some events are outside of the control of the administrator, but emergency action can be initiated immediately if it is pre-planned, even if that action is simply to alert and reassure scheme members who will be impacted and stand ready to deal with any hardship caused.”
