A pension scheme will undergo many significant events during its lifetime; perhaps the date that the accrual rate changed from 60ths to 80ths, or the date the pensionable salary definition changed from gross earnings to basic salary with a deduction; the date the basis switched from Final Salary to a CARE arrangement or when it closed to new entrants.
All these events are meticulously documented. Each change complicates the administration of the scheme and impacts the data that needs to be recorded to administer it correctly. To ensure the correct pension benefits are paid to members it is crucial that advisers understand how the scheme works and that reliable and correct data is held.
An important event, that is often taken for granted, is the transition of pension scheme data from one administrator to another. It is likely that each will use different administration systems, which can necessitate the need to decode or manipulate data. During the transition there are many dangers which can normally be negated by good planning and communication. However, across the industry there have been many occasions where data has been lost or misinterpreted which has resulted in increased liability to the scheme or possible detriment to the members. Quantum has taken on many schemes where significant gaps in data have been explained as being a “historic issue” caused by a bad transition some years in the past.
Quickly understand how the Scheme works
It is important for individuals transitioning data to understand how the incoming scheme works. This will be an understanding of benefit categories, key dates and calculation of benefits. This knowledge will help identify any data issues that in turn can be flagged, raised with the outgoing provider and hopefully resolved quickly. Data items required for ongoing administration need to be identified and mapped to data fields in the administration system to enable continuous administration and ease of automation of calculations.
Ensure all data required is received
An understanding of the scheme’s benefits will allow the new administrators to ensure all data items needed for the ongoing administration have been received. Although data mappings and control totals can identify that data fields exist, the new administrators should check that this data is populated for all necessary members. In addition, it is important that data is received for all expected members. Checks on membership numbers can be completed against contribution schedules and pension payroll, as well as Annual Report & Accounts and Administration Reports.
Ensure no data is lost
If data needs to be manipulated there is a danger of data fields or complete data tables being missed or overlooked during the transition. If may also be possible to “lose” a number of rows from a spreadsheet or ignore a particular status or category of member. To ensure this doesn’t happen, all data received should be documented, a data mapping specification prepared, and a checklist followed. Column totals checks and individual member print checks should ensure no data is lost.
Ensure all data is interpreted correctly
Some administration systems are old and inflexible, and contain a limited number of data fields that can be populated.
If a scheme is particularly complex, it may have been difficult for the previous administrators to record all the necessary data items in the standard fields available. In this scenario, data fields may have been used to record a different data item without adequate relabelling. It is also possible that the previous administrators may overlook informing the new administrators or the note is hidden away in a “decode” document. It is important the receiving administrators can identify all the data items received and queries any data items that are not clear. Similarly, “Miscellaneous” and “Additional” data tables need to be interpreted correctly.
Ensure data not needed is not transitioned
Contrary to the existing (1998) Data Protection Act it has been known that pension administrators will seek to record data that is not required, or is no longer relevant, for the ongoing administration of the scheme. Under the incoming GDPR (applying from 25 May 2018) it is important that only data required for ongoing administration is recorded. This is likely to be a “hot” topic in the forthcoming months and although Trustees will need to make decisions concerning the processing of their scheme data, the transition process will form the basis of identifying the data held and the purpose of holding it.
Quantum has much experience, both of taking on new schemes’ data and the forthcoming GDPR requirements. If you would like to have a discussion without commitment, please contact us, we’d be delighted to assist you.
Ashley Weaver, Senior Project Development Analyst at Quantum