This blog sets out for the first time a fundamental right of the retirement saver, a right to see their pension record in a digitally readable format. The right is fundamental to the “treat customer’s fairly” principal that FCA regulated firms sign up to and it underpins the trustee’s duties in an occupational scheme. It is reinforced by the General Data Protection Act and it will be mandatory for pension providers to demonstrate when the pension dashboard arrives.
There are two reasons why pension contribution histories really matter
- They evidence that the amount you have paid into and taken out of your pension tallies with your pot
- They can be used to determine what rate of return you got while your money has been in the pension scheme
The right to see your pension records is as fundamental as your right to see your medical records.
Not all providers recognise you have this right
Over the past year, AgeWage has dealt with hundreds of letters of authority received from savers asking us to get them their contribution histories and the value of their pots.
We find most pots but when we submit the letter of authority we are rebutted with numerous excuses for not giving up the data you have asked for.
A good proportion of the refusals relate to the letter of authority which is often refused because signed with a signature. One provider sent us such a refusal on an email where the footer boasted
We’ve made a number of changes to make it easier to do business with us online, including submitting paperless instructions, removing the need for client signatures and managing your investments safely and securely online.
And other providers either flatly deny the data or simply ignore the request. I will not mention names on this blog but we are compiling our dossier. Frankly we think these providers are behaving illegally and certainly against the principles of their regulators.
Why does record keeping matter?
Because it is your audit of receipts
In America, those who administrate pensions are known as “record keepers”. Their job is to keep a record of the money they have taken in and the money they have paid out and accurately record the investment. We use a less intuitive phrase- “administration” – an administrator is a record keeper.
If there is no record, you have no way of checking that your money has been invested for you and not for the next person. But it you have a contribution history, a firm like AgeWage can tell you whether your data looks accurate or whether there is something that seems amiss. We can do this by looking at the rate of return you have received and compare it with an average rate of return for those contributions. We have tolerances and if those tolerances are broken, we will call your contribution an “outlier” and will ask that it be checked by your administrator.
Mistakes happen and if you are paid not to make mistakes then you need to be accountable when things go wrong. AgeWage reckons that around 2% of all the data sets it reads , are unaccountable outliers.
2. Because it enables you to see how you have done
There is another reason that record keeping matters. It is the means by which you can understood how the choices you made – the choice of provider, of fund and of when you made your contribution have worked out.
For many people these weren’t much of a choice, you may have been auto-enrolled into a default fund of a pension of your employer’s choosing. But necessarily somebody made that choice and you consented and you are carrying the risk of things going wrong or the joy of things going right.
And because there is no other way of checking on the progress of your pension pot, it is enormously important for you to have access to your record so that you or – more likely- your agent – can tell you how you are doing.
Quality of service
I have been reading IGC , GAA and Trustee reports on DC workplace pensions for the past five years and I cannot remember once, seeing an audit of contribution histories.
For the next round of IGC reports, due in April next year, AgeWage will be sending IGCs a report on the quality of service we received from the administrators of the schemes they oversee and we hope that this information will be commented on in the reports. Our reports will also talk to the quality of the data we received , what level of outliers we found and how the administrators went about looking into anomalies. As I mentioned above, mistakes happen , but it is how you deal with the mistakes that is a mark of good or bad service.
I would like to say that our experience so far has been good. But I cannot. every day we receive an item of post from one or other provider who interprets “data in digital format” as a wake up pack. A wake up pack does not include a contribution history, it is not auditable, it does not tell us about how the pension pot has done.
One notable provider has a glitch in the system so that every contribution history is wrong. I could – but won’t go on. The quality of service we have received actioning the 500+ LOAs we have received in our FCA Sandbox test has been variable trending bad.
What can be done about this?
There are a number of trade bodies in pensions dedicated to ensuring good quality record keeping – most notably PASA .
The Pensions Administration Standards Association exists for a single purpose: to promote and improve the quality of pensions administration services for UK pension schemes.
We will be taking our findings to PASA and asking them to look into the issues ordinary savings have getting hold of their records.
And we will be asking them to take matters up with their members to ensure that we have standards for the delivery of contribution histories in a timely way, accurately and in a digitally readable format.
If we are to have standards, PASA are the people to establish them and we will be asking PASA to give us their view on what members and policyholders of workplace pensions can expect.