In recent months much publicity has been given to the new guidance from The Pensions Regulator regarding scheme data standards. Both trustees and administrators have a burden of duty to ensure that their core data is up to scratch. Failure to maintain accurate and ostensibly complete member records no longer only result in potentially inaccurate settlements or valuations, pension schemes now risk incurring fines and enforcement notices.
Given this new climate for greater data responsibility an article in pensionsweek.com caught my eye. The article suggests that trustees should switch their third-party administrators (TPA) if they have any misgivings about their ability to maintain or report with transparency on the quality of a scheme’s data. This immediately grabbed my attention as it struck me that changing TPAs doesn’t necessarily solve the problem of poor data quality. In fact one of the biggest risks that pension data can be exposed to is a change of administrator and the associated complications of migrating it to a new system. It therefore seems completely counterproductive to me for trustees to move their scheme data before knowing where the gaps and potential issues lie. If you didn’t know the contents of your loft, you wouldn’t just move house to find out.
To my mind, the best way for trustees to assuage their doubts over the quality of their scheme data is to seek an independent data audit. A thorough data audit will not only reveal gaps and inconsistencies in a scheme’s data but it will also provide practical advice to rectify any issues discovered. Above all else, a data audit will immediately provide trustees with certainty over their data whether it is good or bad news. From there the best road may turn out to be a move to a new TPA but to return to my previous analogy – at least on moving day you’d know what was in all your boxes.
Spence & Partners provide a range of independent pensions data auditing services and have recently launched a new data audit tool that provides in depth analysis of all the core data fields contained in The Pension Regulator’s record-keeping guidance.
For more information on our Pension Data Service contact David Davison on 0141 331 1004.