There are more reasons than ever why trustees need to act now to be data-ready for the future. So, finding ways to get them, and keep them, engaged is vital and is a key objective for our Data Working Group in 2020.
TPR are cracking down
In early October The Pensions Regulator announced a crackdown on poor record-keeping by schemes
[1]. They’ve asked the trustee boards of 400 schemes to conduct a data review within six
months. These schemes are believed to have failed to review their data in the last three years. The regulators guidance on record-keeping explains that ‘failure to maintain complete and accurate records means you [trustees] are at risk of not meeting your legal obligations’
[2]. This is a good reminder to all trustee boards that the regulator expects schemes to review data accuracy as well as data presence annually, with extra reviews if a major event takes place such as a change in administrator.
A clearer, quicker, tougher approach from TPR, along with the increasing power they’re gaining to penalise trustees and scheme managers, should provide a strong enough reason for schemes to improve their data quality as soon as possible.
Accurate scheme data is vital to ensure the best outcome for scheme members. Schemes with incorrect, or missing data may be incorrectly calculating benefits as well as missing out on engaging with their members.
Once schemes have conducted a data review, those failing to meet TPRs record keeping standards will be expected to create and implement a data improvement plan. This is likely to involve in-depth data gathering and verification – a daunting task for scheme managers and trustees.
PASA’s Data Guidance provides the detail trustees need.
Get dashboard-ready
Although the election has delayed proposals within the Pensions Schemes Bill, a section that has strong cross-party backing is the pension dashboard, and its arrival within the pension industry seems imminent. It’s vital that schemes are prepared for its introduction.
The accessibility of the dashboard means savers’ information will receive more scrutiny than ever before. It will become increasingly important that schemes hold strong, accurate and up-to-date data, but currently this industry-wide goal seems a way off
[3]. Pensions Administration Standards Association (PASA) President Margaret Snowden declared at October’s PLSA conference: that the data the industry holds now “is not good enough for the dashboard yet”. A promising point is that schemes agree with Snowden. This was highlighted in the Society of Pension Professional’s (SPP) survey on the pension dashboard project, with 45% of members seeing data quality as the greatest difficulty facing the dashboard
[4]. We hope trustees and scheme managers will begin to prioritise data quality in preparation for dashboard.
It’s clear that the overall benefit for dashboard is how it improves engagement between members and schemes
[5]. If schemes are providing incorrect data, this could have a negative impact on members’ engagement and trust. And in an industry where members struggle with trust
[6] the impact could be far larger than a single scheme.
Solving the GMP puzzle
The DB and insurer markets have been talking about GMP for years, but it’s heating up. Most schemes have now carried out their reconciliation work. It’s time to move on to rectification and equalisation. It’s important to make sure data is in good order before rectifying, good member outcomes rely on accurate benefits, and accurate benefits are tricky without accurate data. It’s the foundation of all schemes.
But with some members impacted by both rectification and equalisation, where should trustees start? The PASA Data Group say for now, trustees should ensure they’ve carried out analysis, to understand which members are impacted and estimate the effect both rectification and equalisation will have. Once the data’s been analysed it’s likely that just a small proportion of members are materially impacted by both rectification and equalisation – so there’s no reason to pause work on the rest of the scheme.
Data can no longer be overlooked
Trustees must take an active role in data quality, here’s some practical steps to get started:
· Add data to the agenda for trustee boards.
· Audit your data – not just for presence of data but for accuracy.
· Have strategic discussions in partnership with administrators.
· Discuss data reports with administrators and agree a viable improvement plan.
· Implement controls and assurances to ensure you maintain good quality data.
Let’s face it, data is never going to be as exciting a topic as investments, but it deserves its spot in the limelight in 2020.
Rebecca Morgan, Chair of the PASA Data Working Group
