The Scottish Public Pensions Agency has produced a contingency plan to mitigate against administrative risks, as it combines the service provisions for two other emergency service public sector schemes.
The public sector pensions administrator will take over services for the Scottish Fire and Rescue Service and the Scottish Police Authority from April 1 2015.
This is currently provided by local authority pension administrators, most of whom use either software company Heywood’s Altair or Axise platform, according to the minutes of the agency’s external management board meeting in February.
We have got different computer software [to] the police and fire administration providers and that needs to be migrated to the software
Martin Greenhow
SPPA captures and maintains information on all identifiable threats that may have the potential to affect the delivery of a project within a risk register, said a spokesperson for the Scottish government.
“SPPA follows the Prince2 structured project management process to ensure the successful delivery of all its projects," the spokesperson said.
Contingency planning is a part of this procedure and the plan for absorbing the two schemes is currently under development, the spokesperson added. The main theoretical risks to the project have been identified as:
timescales for delivery of the project not being met;
lack of agreement on the scope of the project – a joint agreement is required to ensure the project progresses;
administration skills, knowledge and experience could be spread too thinly.
The SPPA has put structures in place to help resolve these risks, said Martin Greenhow, a member of the agency’s operations management support team.
The risk of the delivery date not being met was identified because of “the volume of work to be achieved in the timescale", he said.
“We have got different computer software [to] the police and fire administration providers and that needs to be migrated,” said Greenhow.
These risks have not materialised and SPPA “has every confidence that this project will be delivered successfully", the government spokesperson said.
The SPPA previously initiated a project to benchmark its member data against quality criteria set out by the Pensions Regulator, to find more cost-effective ways of improving data accuracy.
The key for system synergy for public sector schemes is scale and consistency which will reduce costs, said Mark Adamson, director at industry body the Pensions Administration Standards Association.
“Any single system will need to be able to handle volume, but the schemes will also need to consider re-engineering some of their processes to maximise the gain from consolidation,” said Adamson. “It is important to get the transition right as the risks of getting it wrong are greater.”
Checking data accuracy
Barry McKay, partner at consultancy Hymans Robertson, said data accuracy was always important but integrating administration systems “allows you the opportunity to go back and make sure that all the data that you do have is accurate". He added: “With the new [career average] scheme it’s going to [need] more accurate data year on year."
One of the difficulties when integrating administration systems for multiple schemes is where scheme rules may not have always been followed exactly and there may not be one method for calculating benefits.
David Davison, director at actuarial consultancy Spence & Partners, said calculating the benefits for members of a scheme that is still open is more complex and like “hitting a moving target”.
“If you’ve got a scheme that is still providing benefits it will keep evolving,” he said.
Davison added the ideal time to carry out a data-checking exercise is at the time schemes are undergoing actuarial valuations. Schemes trying to check the accuracy of their data usually run it through a programme to identify the shortcomings.
