Out-Law News 2 min. read
01 Apr 2014, 6:02 pm
It has also published a report setting out its main findings from the review (36-page /101KB PDF), along with actions to improve record-keeping standards. It has highlighted a number of concerns despite general findings of good practice in the industry, particularly in relation to smaller schemes with lower levels of engagement with their advisers. These included lack of action on record-keeping in some cases until prompted by the regulator, lack of clear roles between trustees and administrators, and some activities being limited to measuring the presence of data rather than its accuracy.
"The findings of the thematic review show that the Pensions Regulator takes record-keeping seriously," said pensions expert Simon Tyler of Pinsent Masons, the law firm behind Out-Law.com.
"The regulator has found that some trustees haven't thought through what is required and implemented an action plan. Trustees who fail to sort out their records are doing themselves no favours – poor records can lead to incorrect payments, and sorting out incorrect payments once they are discovered it no easy task and can prove expensive," he said.
The review took place in two phases and involved a mixture of defined benefit (DB), defined contribution (DC) and 'hybrid' schemes. It was designed to establish whether schemes were meeting the regulator's targets for 'common data', what actions they were taking to manage that data as part of their internal control processes and what they were doing to manage and mitigate errors and gaps in the data. Common data refers to member details common to every scheme including name, date of birth and national insurance number.
During the first phase of the review, the regulator asked a sample of 237 schemes of all types to provide basic information relating to their common data measurements. Of these schemes, 36 were further investigated during the second phase and asked to provide information about their data standards, processes and controls. The seven case investigations were opened after this further review.
According to Andrew Warwick-Thompson, executive regulator for DC governance and administration, the case investigations could ultimately lead to enforcement action.
"Trustees and administrators should really be treating the maintenance of complete and accurate data as business as usual – it underpins the running of the entire scheme and it is only with the right records that they can ensure the right benefits are being paid to the right members at the right time," he said.
DC schemes are already expected to comply with certain standards of record-keeping as part of the Pensions Regulator's Code of Practice for such schemes. Accurate, up to date scheme data will also be essential to enable scheme compliance with new DC quality standards, the end of contracting-out for DB schemes and the reconciliation of Guaranteed Minimum Pension (GMP) records, amongst other regulatory developments, the regulator said.