North East Scotland Pension Fund is working towards implementing a fully automated process for employers submitting member data, after narrowly failing to hit all the Pensions Regulator’s targets for common data accuracy.
The setup will allow employers to submit a monthly file from their payroll system, which will enable the scheme to process up to 14 event types via its database.
It’s a much more efficient way of transferring up-to-date information
Laura Goodchild, NESPF
The Pensions Regulator has set targets for schemes to achieve 100 per cent accuracy for common data created post-2010, and 95 per cent for pre-2010.
Experts have said schemes are closer to achieving the regulator’s targets for data accuracy, as they carry out more regular data cleansing exercises and move increasingly towards automatic systems for data transferral.
The £2.3bn scheme previously implemented an integrated payroll system to provide a more accurate and timely way of paying out benefits to members.
Smaller employers are already able to use the system to process data for starters, leavers and amendments, while the scheme continues to roll out the service for larger employers.
“It’s used less time and money and it provides access to the employers and members and it’s a much more efficient way of transferring up-to-date information,” said Laura Goodchild, manager at the scheme.
Members are able to access data via the internet to update their information, Goodchild said. Larger employers have shown a lot of interest in the system as it will save them time and money, she said, but the scheme is continuing to work with smaller employers to get them engaged with the system.
“You need to be careful to have a very rigorous security process around that if you’re enabling members to log in and change that data,” said Marian Elliott, director at consultancy Spence and Partners.
The scheme had a pass rate of 99.71 per cent for addresses gathered post-2010 and 94.58 per cent pre-2010, according to its record keeping data for 2013.
This is compared with a pass rate of 99.01 per cent and 95.69 per cent for the same periods in 2012.
All address fails were for deferred or frozen refunds, apart from 23 for active members, the scheme’s data records show.
Hitting the regulator's targets
The regulator takes a risk-based approach when deciding on any regulatory action, said a spokesperson for the watchdog.
Where a scheme has not yet reached the targets but has assessed their data and has made progress in implementing an action plan, the regulator is much less likely to take action than for a scheme which has not taken any significant steps to measure and improve their data, the spokesperson added.
“If we find issues of poor behaviours and internal controls that pose a risk to members’ benefits, we will consider whether it is appropriate to use our powers and will look for schemes to demonstrate that they have taken steps to rectify any problems,” said the spokesperson, adding that in the majority of cases, the regulator will work with trustees and administrators to improve and rectify the situation before resorting to using its powers.
“It’s actually more common than you think for schemes to achieve that target,” said Elliott.
Common data created after 2010 is usually more accurate, as it will consist of salary changes and amended members’ statuses in the scheme, she added.
It’s important for trustees and employers that administration of the scheme is carried out accurately to calculate benefits correctly and avoid complaints and even claims from members, said Mark Adamson, board member of industry body Pensions Administration Standards Association.
“For employers who want to carry out risk reduction exercises on pension schemes, to perhaps reduce their liabilities for the future, then data is important as well, of course,” said Adamson.
Correcting data can be carried out either on a case-by-case basis or as part of a data cleansing project, the latter is more cost effective, he added.
