Record Keeping Guidance
The guidance published by the Pensions Regulator (tPR) in June 2010 sets out clearly the legal responsibility of trustees to maintain good member records and its intention to use its full regulatory powers to improve record keeping should the trustees prove unable or unwilling to do so.
The Pensions Regulator expects that record keeping be subject to the same risk assessments made in other areas with provisions made to monitor and manage data quality in the long term on an annual basis. tPR has indicated that monitoring and managing data quality is a key internal control area for trustees to focus on.
The guidance is aimed at trustees, providers and administrators, who as well as checking that data exists, needs to ensure that their data is accurate. It sets out a proposed framework for data checking.
The guidance doesn’t exclusively relate to electronic data and tPR states that where data isn’t held on the computer system, providers, administrators, trustees and employers should consider whether this is the best method of holding records and whether their internal controls over this aspect are appropriate, taking account of the risks involved.
The Regulator has identified two types of key data:
- Common Data
- Conditional Data
TPR defines common data whose purpose is to uniquely identify a member. It is only concerned with the presence of basic information about the member and doesn’t enable the provider to calculate or settle benefits. They have specified a set of common data that it recommends is present for all members of all types of pension schemes.
Furthermore, it recommends that trustees develop improvement plans to reach the minimum standards for common data by 2012. These minimum standards are defined as:
- For new data created after June 2010 – 100%
- For legacy data (created before June 2010) – 95%
TPR defines conditional data whose purpose is to provide a view of the data required for the effective administration of the scheme, and to allow providers or trustees to measure changes in the data over time.
The existence of this data will depend on the type of scheme, scheme design, system design, and an individual’s membership status. They have not explicitly specified a set of conditional data that should be present for members of the scheme, but has provided an illustrative list. It specifies that scheme providers, administrators and trustees are best placed to decide the exact constituents of this conditional data.
Targets for the standards of conditional data should be set by the trustees in conjunction with the administrators, or by the provider. Furthermore, they recommend that the presence of the conditional data required for effective administration is measured and that, where necessary, a plan is developed for improving it. No definitive timeframes for these improvement plans are specified. tPR has specifically drawn attention to different scenarios and events in the life cycle of a scheme and suggests that providers and trustees pay particular attention to the data requirements of each.
The guidance should form part of the trustees’ risk assessment process and be included in an adequate internal controls framework, as detailed in the Pensions Regulator Code of Practice No. 9. The data tests are part of the risk assessment process in respect of the scheme administration and provide an indication of the effectiveness in meeting the legal requirements to have adequate internal controls.
Where the tests indicate that there may be a problem, further investigation will be required and plans put in place to correct errors or fill any gaps indicated. It is expected that such plans will ensure that problems with record keeping are corrected by the end of 2012.
The Pensions Regulator will take enforcement action where the evidence indicates a breach of pensions legislation.
