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.
Notes for editors
- TPR set out its expectations on data measurement in 2010 and has more recently produced guidance to help trustees and scheme managers meet their duties including how to measure and improve data.
- This guidance is available at record-keeping.
- We ask schemes to report on their data in the scheme return so we can build a better understanding of where improvements need to be made and where we may need to take action.
- Analysis of scheme return data provided to TPR suggests that almost a quarter of schemes have not measured the quality of either the common or scheme specific data they hold in the last three years.
- Common data is used to identify scheme members, such as their names, dates of birth, national insurance numbers and addresses. Scheme-specific data is needed to meet a scheme’s legal obligations and to carry out its daily functions. This will vary between schemes but may include such items as how members’ funds are invested, the levels of pension contributions and the value of individual members’ benefits.
- The 400 schemes that are being told to complete data reviews within six months include defined contribution, defined benefit and public service schemes.
- Section 13 of the Pensions Act 2004 gives TPR the power to issue an improvement notice to persons (typically the trustees or managers of pension schemes) who are in breach of obligations under pensions legislation. The notice orders those named to take specific action.
- TPR is the regulator of work-based pension schemes in the UK. Our statutory objectives are: to protect members’ benefits; to reduce the risk of calls on the Pension Protection Fund (PPF); to promote, and to improve understanding of, the good administration of work-based pension schemes; to maximise employer compliance with automatic enrolment duties; and to minimise any adverse impact on the sustainable growth of an employer (in relation to the exercise of TPR’s functions under Part 3 of the Pensions Act 2004 only).