In 2010 the Pensions Regulator (“tPR”) set out its expectations for trustees and managers of pension schemes regarding standards of record keeping and data measurement. They defined two types of data:
- Common Data – data that is used to identify scheme members, such as their names, dates of birth, national insurance numbers and addresses.
- Scheme Specific Data – data that is needed to meet a scheme’s legal obligations and to carry out its daily functions.
Following this, tPR provided further guidance and began requiring schemes to report on their data as part of the annual scheme return.
What’s the issue?
Trustees should review their scheme data at least once a year to ensure it is accurate, complete and up-to-date and tPR expects trustees to have controls and processes in place to maintain high data standards.
Having analysed the scheme return data that it receives each year, tPR is concerned that nearly a quarter of schemes do not appear to have reviewed their Common or Scheme Specific Data in the last three years.
tPR is contacting 1,200 schemes to remind them to carry out data reviews. A subset of those schemes are being ordered to urgently review the data they hold as part of a crackdown on poor record keeping. Those that fail to comply may face action which could include an improvement notice about inadequate internal controls, leading to potential fines of up to £5,000 for an individual, or up to £50,000 in any other case.
Joanne Eynon, Partner & Actuary at Quantum Advisory said “If you are one of the 400 schemes that tPR has written to, requiring you to review your data urgently, then that is a worry for trustees and scheme administrators. Having good data is essential if the trustees are to pay the right benefits, to the right members, at the right time.”
tPR points to the forthcoming launch of the pensions dashboards as another reason for holding accurate membership data. Having full and accurate membership data will also bring potential savings if you are targeting a buyout of your scheme’s liabilities in the near future, as data validation can be a costly and time consuming part of any buyout process.
If you have not reviewed your scheme’s data in the last year then it is essential that you contact your scheme administrator to arrange this.