Regulator calls for proportionate DC data requests

But any additional requests – such as setting a single date for scheme returns to get aligned assets under management (AUM) data for trust-based DC – must be "proportionate" in the burden they place on schemes, it said, especially for the smallest plans.

Currently, schemes are required to submit their market value to the regulator every year at a date of their choice, usually from their annual report or financial statement. They are also required to submit details of contributions, split between employer and employee.

But all schemes could be called upon to present their market data on a single date, said analysts Spence Johnson, as well as providing a simple asset breakdown showing where their funds are invested.

Director Magnus Spence told schemeXpert.com this would show trustees how their set-up compares on size and investment strategy to the rest of the DC market.

"When you talk to trustees, they look and see what other schemes are doing," he said. "They do find it very important to compare themselves – anything that enables that to happen more accurately would be helpful to them."

The regulator agrees with the importance of providing credible figures on the size of the DC market, in addition to what it provides in its yearly DC Trust reports, and other reports available from the Office of National Statistics (ONS).

It was responding to a letter written by Spence last month about the paucity of AUM information for DC schemes.

"We need AUM data above all else," he wrote in correspondence circulated to National Association of Pension Fund members. "As asset managers become more active in DC pensions in the UK, and as revenues of service providers are increasingly expressed in relation to AUM, so AUM is increasingly the statistical currency that matters." 

Spence queried the regulator's decision not to release its full AUM data for trust-based DC plans, saying it was crucial for providers to understand whether the vast majority of assets are held in very small schemes.

Knowledge is power

The regulator collects the majority of DC data through the scheme return provided by trust-based schemes, as well as working with the ONS, which focuses on the contributions paid into private and workplace pensions.

The scheme return – a process required of both defined benefit and defined contribution schemes, at a given time each year – collects various scheme, trustee, employer and adviser details. The regulator provides a four-minute course on its website about the process, and the reasons behind it. 

But, crucially, it does not require information on contributions and assets from schemes with fewer than 12 members, where it told schemeXpert.com most trust-based DC assets are collected. Of 46,000 occupational DC schemes, more than 43,000 have memberships below this level.

"It is questionable whether small self-administered schemes (SSASs) and schemes with fewer than 12 members are representative of the wider DC market which will be used for auto-enrolment, and whether it is meaningful to collect data on the assets in this segment," said a spokesperson.

Size is one factor, but another is the way the scheme return is conducted – as schemes do not have the same date to collect their data, the regulator does not want to issue overall figures compromised by market volatility. This justification is diminishing.

"That argument doesn't have validity at a time when there is much more stock market stability," Spence told schemeXpert.com. "In 2008, that reason was a good one. In 2011, it is not."

One solution would be to ask schemes to provide this information on the same day, but the regulator is tentative about any changes which make trustee and scheme managers' lives harder.

It set out four key requirements for any changes:

1. There is a business need for the data which outweighs the burden imposed in acquiring it.

2. No existing data or alternative sources are available to satisfy the need.

3. A risk assessment has been passed on the data item, incorporating burden impact, usage, governance and security.

4. Data is collected in the most effective, least burdensome way.

Despite the regulator's cautiousness on increasing the burden, it recognises the need to listen and "strengthen" its knowledge in this area as the market matures.

Trustees and scheme managers should be ready for increased, if not unwieldy, demands on the information given by their scheme.