UK - The Pension Regulator (TPR) has warned trustees it is strengthening its approach to regulating record keeping and administration, as only 19% of schemes have checked they hold all the fundamental common data required about members.

In a test sampling survey of 689 pension schemes, TPR found only 14% had tested both common and conditional data as recommended by guidance issued in January 2009, which set out simple tests for key data fields. (See earlier IPE article: TPR guides on 'common' and 'conditional' data)

Within these figures, however, one-third of member records had less than 80% of common data fields completed, and more than half had less than 80% of the conditional data fields filled in.

TPR noted these results "clearly raise concerns", particularly ahead of the 2012 regulations that require high standards of record keeping. It concluded while it had raised awareness of the importance of the issue with its guidance last year - causing some providers and third-party administrators to make reports available - only a limited number of schemes had actually carried out the tests.

In response, it has issued a consultation setting out proposals for the regulation of standards for member data. Alongside its continued 'educate and enable' approach - including a new record keeping e-learning module for the Trustee Toolkit - it has proposed setting targets for the accuracy of the common data which schemes must hold. The regulator will also review the performance of schemes in a sampling exercise.

TPR stated: "We will select a number of schemes, based on pre-defined risk criteria, for which we would require tests to be carried out. The results and/or data would be submitted to the regulator for scrutiny, and if necessary further action."

It warned that evidence of poor record-keeping would lead to enforcement action "unless agreed, specific action plans are in place to rectify the problems and these plans are implemented". Potential actions by the regulator could include using improvement notices, issuing penalties or fines for failure to comply and in extreme cases the prohibition of trustees and/or appointment of new trustees.

Bill Galvin, executive director of strategic development at TPR, said: "Accurate, complete data on members is a basic building block for almost everything that happens in a pension arrangement, and we will take a much firmer line going forward.

"Automatic enrolment will bring millions of people into pension saving for the first time, increasing the volumes of member data held. This makes it all the more important that schemes put their records in order," he added. 

Andrew Cox, senior consultant at Lane, Clark & Peacock (LCP), added: "The industry had the opportunity to put its house in order regarding data and it failed to do so. The Regulator is now forcing trustees and others to take action quickly.

"The 2012 regulations will include specific legal provisions which will allow TPR to strengthen his approach to data and take enforcement action where poor practices exist.  Data is definitely moving up the agenda for all parties."

However, Ian Bell, head of pensions at Baker Tilly, argued while TPR has been disappointed by the lack of progress made on improving member data, the real challenge will lie with smaller schemes.
"As with any guidance produced by TPR, in my experience larger schemes with larger governance budgets tend to shrug their shoulders and will do their best to comply. The opposite is true of smaller schemes and that's where the challenge really lies for TPR."

He added: "Those smaller schemes are typically where data will be at its poorest and also where the risk of becoming a customer of the PPF is greatest. Squaring that circle, whatever the guidance, will be a difficult task."

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