Many schemes are still failing to properly assess the quality of their common and conditional data, results from the Pensions Regulator’s 2014 record-keeping survey show.
The regulator has warned that schemes not meeting data standards risk increased costs and reputational damage.
The regulator’s target for common data is 100 per cent for records created after June 2010, and 95 per cent for records created before that time. Common data are those applicable to all schemes to uniquely identify a member.
Overall, 63 per cent of all trust-based scheme members are in a plan where the common data score is higher than 95 per cent. This is an improvement from 57 per cent in 2013.
Philip Titchener, senior consultant at Towers Watson, said: “The momentum that the regulator had hoped for doesn’t seem to have materialised.”
However, he said the regulator should take significant action to encourage schemes rather than simply telling them their data is not good enough. “Things won’t get better unless the [regulator] gets some sort of teeth,” he added.
The survey showed that small schemes (44 per cent) were less likely than larger schemes (9 per cent) to have measured their common data. Seven in 10 small schemes (71 per cent) had not measured conditional data.
Titchener commented that the disparity in data quality between small and large schemes could be due to a “one-size-fits-all approach to guidance” that does not take into account the difference between the two.
“The regulator should probably start thinking about how it may help the smaller schemes to actually engage in the process, given that they do have fewer resources and they are in fact more special cases,” he said.
The importance of good record-keeping
Louise Hallard, policy leader at the regulator, said: “Data underpins the running of the entire scheme and it is only with the right records that schemes can ensure the right benefits are being paid to the right members at the right time.”
It is not only members who could suffer. “Poor record-keeping may lead to significant additional costs in a number of areas,” said Hallard. “When a scheme’s poor record-keeping becomes known, it can also cause reputational damage.”
In total, 10 per cent of schemes were not measuring common data at all, and 42 per cent were not doing so for conditional data. Those that were not cited either a lack of time, the task not being a priority or a belief that it is not relevant to their scheme.
Gary Evans, principal in retirement administration at consultancy Mercer, said: “When schemes or administrators say it’s not a priority, what they might mean is that they’re not yet reaching the endgame.”
But maintaining high quality data is necessary on a day-to-day basis. “There’s a base level of data quality you need to administrate a pension scheme, and if you don’t have that, then meeting the regulator’s requirements is the least of your concerns,” Evans added.
The regulator said schemes will have to make record-keeping a priority in the run-up to 2015, when new government legislation will be introduced to embed minimum governance standards in defined contribution schemes.
Evans advised: “You’ve got to look at [your data] every year and have a conversation about what could be done, and what the trustees are likely to want to do with the scheme in the next two to three years.”
He added: “Decide where you are, and then do the testing of the fund relative to that position.”
