Light at end of tunnel in Barnet admin fiasco

Pension data errors at the Local Government Pension Scheme member fund have now fallen below 1,000, a project update revealed, with 88 per cent of errors corrected.

The problem was once so serious that Hymans Robertson, the actuary to the scheme, was commissioned by Barnet council to investigate the quality of the pensions data, and it was feared that inaccuracies could lead to a delay carrying out the triennial valuation later this year.

The report, which was presented to the Council’s Pension Fund Committee in March 2019, revealed thousands of data errors in the scheme.

We didn’t realise how bad the situation was in 2017. Since then it has taken nearly two years to sort out the issues of pensions data quality and that is not good enough

Arjun Mittra, Barnet councillor

Errors were rated as critical where data fields are missing, or contain values that would prevent the actuary from carrying out actuarial calculations and warnings.

Most of the critical errors involved active members, with 6,642 errors affecting these members in December 2018. A further 286 concerned deferred pensions, 497 affected pensioners and 228 were in relation to dependants.

By April 1 there had been substantial improvements, with the Capita/London Borough of Barnet Data Cleanse Project Progress Tracker showing that the critical data errors for actives were now down to 951, with one pensioner and one dependant case outstanding.

Of the active errors, 165 were due to the member leaving after March 31 2018, and 2 were due to the member joining in March 2018 but not being paid until April. This means only 784 errors across 484 records are being pursued externally with participating employers and payroll providers.

When asked about the continuing catalogue of errors, a Capita spokesperson said: “We are working closely with the Council to overcome historical issues around data accuracy.”

Missing data caused problems

While errors have not been eradicated, the current situation is an improvement. According to the Hymans report in March, within the active population there were around 2,000 errors relating to salary information – 16 per cent of active records.

The salary information on these records was more than one year out of date, ranging from 2013 to 2017. The accrued career average pension pot data showed around 1,800 errors.

These were due to a zero, negative or out-of-date career average revalued earnings pot figure appearing on the record, even though the member was classed as currently active in the scheme. Similarly to the salary information, a missing Care pot value can be an indication the member has left the scheme.

Around 2,800 records were missing the current member contribution rate, a requirement for the valuation, representing about 23 per cent of active records.

The critical errors on the deferred extract were mainly due to the date of last pension increases being missing from the record.

On the pensioner extract, 150 records had errors – missing basic details missing such as the date of pension commencement or type of pension (eg. normal, ill health, etc).

An administration record to forget

With the improvements made, the Barnet fund’s triennial valuation looks back on track.

George Bruce, head of treasury at the London Borough of Barnet’s finance department, said: “Work continues with the remaining errors and we are confident with the timetable to provide March data to the actuary by end June and the overall valuation timetable. We will be providing an update to the Pension Fund Committee on May 30 when they next meet.”

The issues go back some years. In 2017, the Pensions Regulator said it had fined the Local Government Pension Scheme member fund £1,000 for failing to submit its 2016 scheme return on time.

Last year, the council also reported itself to TPR after failing to produce 447 pension benefit statements on time.

Arjun Mittra, a Labour councillor on Conservative-controlled Barnet Council and member of both the borough’s audit committee and financial performance and contract management committee, said: “The Pensions Regulator’s fine was a surprise to us. We weren’t expecting it. We didn’t realise how bad the situation was in 2017. Since then it has taken nearly two years to sort out the issues of pensions data quality and that is not good enough.”

“We seemed to have escaped a second fine by the skin of our teeth,” he added. “Capita has completely failed and it is time for this failing contract to be scrapped.”

Fund not out of woods yet

A Barnet resident and blogger, John Dix, told Pensions Expert: “Action plans are drawn up, people apologise but there seems to be a fundamental lack of control systems that allow these failures to escalate to a point where regulatory intervention is threatened. The lack of consistent performance creates uncertainty and increases costs; for example, Barnet have had to appoint a separate pensions consultant to monitor pension administration performance.”

“There are still plenty of muck-ups,” says Mr Mittra. He alleges that a few weeks ago, they effectively "auto-enrolled 167 people in to the pension fund including councillors – councillors are not legally entitled to be part of the local pension scheme. They did not actually auto-enrol us but made a deduction for 167 people, and some of them are in extreme financial hardship

“People like binmen were affected – and were seriously affected. We all didn’t all receive the correct pay”.

When these allegations were put to Capita, a spokesperson said: “No employees were auto-enrolled, and this payroll issue was not related to pensions services. A technical payroll error led to extra deductions being taken from a number of employees. This was flagged immediately to the council, and refunds were made within three days. We have apologised to those affected.”

Interested in LGPS? Register now to attend the Pensions Expert Local Government Pension Scheme Forum on 12th September 2019 live.ft.com/LGPS