The Pensions Regulator is urging schemes to continue the drive to improve the quality of their record-keeping by correcting errors in ‘common data’ and by putting plans in place to improve the quality of ‘conditional data’.
The call to action follows the regulator’s code of practice for trust-based defined contribution (DC) schemes coming into effect, and the launch of its consultation on defined benefit (DB) regulation, including an updated DB funding code of practice.
The regulator intends to review its record-keeping guidance next year following the passage of the current Pensions Bill and the outcome of its thematic review of record-keeping, which covers a sample of around 250 schemes of different sizes. The regulator is however concerned that some schemes may have stalled on progress amid speculation it intends to set stringent targets for the presence of conditional data in scheme records.
The regulator’s executive director for DC, governance and administration Andrew Warwick-Thompson said:
“Our corporate plan indicated that a review of our record-keeping guidance would take place this year. However, the current Pensions Bill contains a number of clauses relating to scheme quality and administration standards, so we feel that a full review of the guidance would be more useful and appropriate when these details are finalised.
“We don’t expect schemes to sit on their hands waiting for targets to be set. Record-keeping is an important part of the new DC code of practice. Trustees have a duty to maintain accurate records and should be taking action to measure their conditional data and putting plans in place to improve it now.
“Accurate records are central to members receiving the pension benefits they are due, and this will be even more important with the introduction of the automatic transfer regime and the Government’s initiative to drive up quality standards. We can confirm that we will not be setting targets for conditional data in the same way that we did for common data - but we absolutely expect schemes to be able to demonstrate that they have credible plans in place to improve this data. We may set targets around the timings for these plans to be implemented.”
The regulator’s most recent record-keeping research showed that 2.3 million members are in schemes where the common data is not measured or significant improvements are needed to meet a level of at least 95 per cent. Common data includes member details common to all schemes such as name, date of birth and National Insurance number.
The survey also highlighted that measuring conditional data – more detailed data such as contribution history, date of leaving and other items needed to accurately calculate a member’s benefit – is viewed as less of a priority by schemes.
The regulator’s DC code of practice, which came into effect last week, covers the importance of good administration and the legal requirements for trustees. The regulator’s thematic review on the standards of common data is underway, with findings to be published next year. With thematic reviews expected to be used routinely in the regulation of DC schemes, the regulator emphasises the importance of trustees ensuring that their contact details and those of their advisers are kept up to date through the regulator’s online Exchange system.
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