Spence & Partners latest blog for Pension Funds Online –
The number of firms offering daily valuation tools has risen significantly in the last 12 months and many pension scheme trustees now have access to real time updates of their funding position.
This is a step change from the days when accurate figures were available once every three years, fifteen months after the effective valuation date, with an approximate roll forward provided once a year between valuations.
Whilst each consultancy firm extols the particular virtues of their system, is it time to take a step back and ask whether trustees are actually getting the most they can out of their spend on these tools? Read more »
Spence & Partners, the UK pensions actuaries and administration specialists, today said that schemes should be in a position to react to changes to their funding position on any day, making the idea of only reviewing funding strategy at a triennial valuation date an outmoded concept.
Marian Elliott, Head of Trustee Advisory Services at Spence, commented: “With many schemes looking to implement a de-risking strategy or dynamic asset allocation strategy, there is a need for more accurate and up to date information. We are therefore supportive of the recent view from PWC that the Regulator’s objective to complete the valuation report within 15 months of the valuation date is too long a period – but we would actually suggest that schemes and advisors could go much further than simply cutting this time down as suggested.
“Trustees and sponsors need greater clarity to be able to make timely decisions with regards to changes to the funding strategy and need to be able to seek out opportunities based on up to date information and by assessing the current economic situation. The data being used should be accurate and the best technology in the market should be able to turn this into a full analysis of scheme funding on the spot – why settle for anything less than that? Our actuarial administration system already provides figures ‘on tap’, so that funding and investment decisions can be made at any time.”
Elliott continued: “We believe all-year-round governance is the way forward and that there is no reason not to be able to use the latest technology in terms of data management and actuarial modelling in order to deliver this. As well as greatly reducing unnecessary time and advisor costs for number crunching, this approach also brings clients more into line with TPR’s requirements on the monitoring of funding plans and makes them far more reactive to funding and de-risking opportunities.”
Spence & Partners, the UK pensions actuaries and administration specialists, today advised that more schemes should be auditing their data controls to avoid data protection fines and suggested a number of steps that schemes should consider to ensure better information security:
- A strict data policy needs to be implemented and maintained;
- The easiest things can be overlooked and it is important to take a common sense approach. Data should not just be discarded in bins. Make sure there are confidential waste bins and that a specialist firm is employed to dispose of the waste;
- Carry out spot checks on staff to ensure compliance with policies in place;
- Consider having independent audits in accordance with recognised accreditations e.g. ISO 27001 or AAF;
- Data security is not a tick box exercise – more probing questions should be asked; and
- Train staff and make sure that they understand how important data security is and the procedures that need to be followed. Read more »