TPR Press release
The trustees of hundreds of pension schemes are to be ordered to urgently review the data they hold as part of a crackdown on poor record-keeping.
The Pensions Regulator (TPR) is asking the trustee boards of 400 schemes to conduct a data review within six months. These schemes are believed to have failed to review their data in the last three years.
The trustees will be required to report to TPR what proportion of their members they hold accurate common and scheme-specific data for. Those that fail to do so may face action, which could include an improvement notice about their inadequate internal controls. Failure to comply with the notice carries a fine of up to £5,000 for an individual or up to £50,000 in any other case.
A total of 1,200 schemes are being contacted to remind them to carry out data reviews of both common and scheme-specific data every year. Trustees and scheme managers are responsible for ensuring these reviews are completed.
The move comes as TPR tightens its regulatory grip to drive up standards of governance and administration and deliver better outcomes for pension savers. In addition to record-keeping, communications will be sent to more than 1,000 schemes this year about issues such as dividend payments to shareholders and the length of recovery plans.
David Fairs, TPR’s Executive Director of Regulatory Policy, Analysis and Advice, said:
“Accurate record-keeping is vital to good governance and administration – without it trustees cannot ensure that savers will get accurate information or receive the pensions they are entitled to.
“Requiring trustees to carry out reviews will force them to look closely at their data and administration and take appropriate action to bring their systems up to scratch.”
Without accurate records, schemes cannot process financial transactions promptly and accurately, communicate with their members, check employers are correctly paying contributions, have confidence in the accuracy of scheme valuations or assess whether savers are getting value for money.
Accurate record-keeping will also be vital for the pensions dashboards so that savers can see exactly what pension savings they have and consider whether they need to put more away for later life.
Trustees that discover that the data they hold is of poor quality will be expected to draw up improvement plans to rectify the problem.
We’ve analysed data of hundreds and thousands of individual savers. Some have been in contracts with insurance companies known as personal pensions, others have been in occupational pension schemes – all the pots have been from defined contribution savings plans.
What we’re finding is plenty of errors, and the errors get worse the further you go back in time. But finding the errors is easy, fixing them isn’t.
Many of the datasets we’ve looked at have been partial. Data before a certain point will have been archived – often on microfiche and is not in machine readable format.
It’s not just the workplace pensions that need auditing…!
Many of the defined contributions pensions we have today were funded in part or wholely by the DWP our of contracting-out rebates. The only way to check if the rebates were accurate would be to reconcile against payroll records but few of them survive. The same will be said of contributions into workplace pensions which we know from work done by PensionSync will often be inaccurate too.
The Pension Regulator should guard about insisting on spurious accuracy in certain areas while permitting other areas of contribution checking and record keeping to go uninspected.
While we applaud a tough crackdown on record keeping where standards are lax, we guard against creating an expectation of perfection.