Barnet grapples with data difficulties

In July 2017, the fund was notified by tPR of a £1,000 fine over its failure to submit its 2016 employer return information on time. It became the first public service pension scheme in the country to be fined by the regulator.

Administration of the fund is outsourced to Capita Employee Benefits.The council issued Capita with a contractual remedy notice in August 2017. It also agreed a service improvement plan over quality assurance, project management and communication.

There needs to be the appropriate checks and balances when the data arrives at the scheme administrator

Ian McQuade, Muse Advisory

Barnet identified two “high risk-rated issues” as part of its internal audit, relating to scheme data quality and the preparation of annual benefit statements. It also observed six medium risk-rated issues.

Employers need to be on side

According to Barnet’s internal audit progress report for Q4 2017, a review conducted in October found that scheme data quality was below tPR standards.

Eighty-five per cent of data created before June 2010 and used “to identify team members” contained no missing information, compared with a target of 95 per cent.

It has also been discovered that “a data quality review of the data used to calculate benefits and value the fund has not been undertaken, but a review is currently being scoped”.

Barnet found that there were problems with the data provided by employers for 60 per cent of the employers reviewed, and that there was no reporting on the nature and degree of data quality issues observed.

Ian McQuade, director at governance specialists Muse Advisory, said: “Some of the issues around the data are as much to do with the fact that the data being provided to the pensions administrator isn’t of a very high quality.”

The report states: “Arrangements with scheme employers means that the scheme currently has limited ways of encouraging compliance with scheme working practices.”

According to McQuade, “data quality within scheme administration comes all the way from the employer, it comes through the interfaces… there need to be the appropriate checks and balances when the data arrives at the scheme administrator”.

Charge the employer to fix data issues?

According to the report, the scheme has accepted the need to invest in improving the quality of its data, and has acknowledged that this “may be a costly exercise”.

It has floated the possibility of funding these improvements with contributions from employers.

Under regulation 70 of the Local Government Pensions Scheme Regulations 2013, the scheme has the ability to charge employers for this work, “providing the reason for the rectification work is due to scheme employers failing to meet its obligations”, the report reads.

David Davison, director at consultancy Spence & Partners, said that pursuing this approach might lead to accusations from employers over inadequate communication.

The scheme could have asked the wrong questions, in the wrong format, of employers. “It might not necessarily be totally the responsibility of the employers,” he said.

The fund highlighted its communications strategy as a medium risk-rated issue in its report. It said: “There was no scheme communication strategy or agreed fund administration strategy in place during the period under review.”

Is Capita to blame?

Capita was awarded two 10-year contracts with Barnet Council in 2013. Its regional enterprise contract deals with front-line services, while the customer support group contract relates to backroom service outsourcing.

The contracts are due for review next year, according to Labour councillor Arjun Mittra, who sits on the council’s pensions committee, audit committee, and performance and contract management committee.

Mittra did not rule out exploring the return of the fund’s administration in-house, in the event of a Labour victory at this May’s local elections.

“Prior to Capita, the council’s management of its pension fund administration was generally considered to be pretty good,” he said.

“A service improvement plan has been agreed with Capita, which is being scrutinised by Barnet's local pensions board. The improvement plan has also been shared with the Pensions Regulator,” a Barnet Council spokesperson said. 

“Discussions are ongoing with the regulator to ensure that agreed improvements are being achieved.”

A Capita spokesperson said: "We have a robust plan in place to enhance the pension service we provide Barnet Council and, working closely with them, are delivering against agreed targets."