Atkin trustees, actuaries, consultants & administrators

Campaign For Good Data – An ignominious start

I went to see the comedian Michael McIntyre recently.  I won’t repeat any of the jokes in case any of you are going to see him on this tour.  However, I did howl at his sketch on the spice rack.  One of his repeated refrains was ‘how depressing is my life’.

For some reason, this catchphrase crossed my mind as I sat down and started typing.  I’m now three years older than Alexander the Great was when he had conquered the known world; I’m sitting down to write my first ever blog which can be read by anyone with access to the internet and I’ve decided to address the topic of pension scheme data. Michael McIntyre is performing to tens of thousands of people.  I’m hoping for something in the tens.

If you work in the pensions industry you will probably have a pension data horror story to be wheeled out at opportune moments (I usually start telling them when double glazing sales people ring me up in the evening). 

Bad data is a hot topic.  The Pension Protection Fund has recently estimated that 40% of schemes were delayed in entering the PPF because of bad data.  This obviously has a ‘knock on effect’ on the costs borne by the transferring schemes and the amount of assets transferred to the PPF.   Given the longevity of pension schemes and the number of changes they are subject to over the years (members, advisers, rules & legislation) data ‘black holes’ are an inevitability.

The PPF’s estimate is quite revealing. In the best case, one must assume that the Trustees and their advisers were unaware of the problems.  At worst, perhaps there was awareness of potential problems but they were ignored or deferred for another time. 

Full data audit exercises can be expensive; Trustees & sponsoring employers may baulk at the costs.  Any administrator tendering for new work would be brave to push for a data audit exercise at the outset.  Cost will be one of the major factors in the minds of the Trustees or sponsoring employer looking to make a new appointment.  Factoring in the cost of a data audit exercise is not likely to impress.  However, the PPF’s comments indicate that glossing over data issues is false economy.

The Pensions Regulator has obviously issued a good practice guide to record keeping which aims to help Trustees and administrators to check on the existence and accuracy of key data.  This is a very useful document but is it enough to deal with the current data issues in the UKs pension schemes?   Perhaps for bigger schemes where there are well informed trustees supported by good advisers and a supportive employer, but I can guarantee that there are many schemes out there with data issues which will not be picked up until such time as it reaches the ‘endgame’ where buy-out is considered or it enters an assessment period of the PPF.  

The costs of bad data will become evident over time and ignoring the issue now just delays the inevitable.  The case for more regulation on record keeping is compelling. It would be relatively simple for Trustees to be required to provide confirmation of compliance with tPRs guidelines in the annual scheme accounts on a ‘comply or explain why not’ basis.  Similarly, Trustees could be asked to confirm compliance directly to tPR in the Scheme Return. 

The risks and costs associated with poor data are great.  Guidelines and encouragement can only go so far to remedy the issues; it may well be time for stronger action.

First published: 12.10.2009

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I have worked on a number of schemes with Atkin Trustees Limited and with Richard Bryant in particular. I found them to be a very organised team who focus on achieving practical and cost efficient solutions.

Michael M Jones, Partner, Charles Russell LLP