But pinning down correct data can take a “disproportionate” amount of effort
When it comes to administration, new figures from the Pensions Regulator reveal a tale of two industries.
The statistics, published last week, show continuing progress over the past year by schemes that have got a grip on their records. However the same figures reveal no shrinkage in the sizeable rump, which have.
“If they were still at the station 18 months ago, they won’t have moved since,” says Robin Simmonds, partner at Sackers.
The most worrying finding for the regulator is that for the first time there has been a slowdown in the rate at which schemes are taking action to measure their core or ‘common’ data.
Conditional data is not recorded by 42% of schemes
Exactly one tenth of schemes surveyed by the regulator said they were not measuring these vital statistics, up from 9% in 2013. Conditional data is not recorded by 42% of schemes, a sizable figure albeit an improvement on last year’s 46%.
The regulator’s executive director for DC, governance and administration, Andrew Warwick-Thompson is clearly frustrated by the lack of progress that the figures uncover.
He said: “It is highly disappointing to see that a proportion of schemes still do not see record-keeping as a priority.
“We will be working with schemes to improve standards but we will take action where problems become apparent to us and report publicly on the outcomes, as appropriate.”
The regulator said it was opening four new investigations into schemes that are falling short. This is on top of the seven cases, announced last year, which are already up and running.
Happier news is the year-on-year increase in the proportion of schemes able to report that 95% or more of their data is accurate.
For DB and DC schemes, the proportion hitting this target rose respectively from 56% to 68% and from 47% to 55%.
Schemes are finding it hard to keep up with the sheer volume of change
And the bigger the scheme, the greater the chance of progress with 64% of large funds having a common data score of 95% plus, compared with 33% of their small counterparts.
Simmonds said the regulator’s figures reflect the picture that he is seeing across the industry.
The hard core of schemes failing to make progress are probably suffering from initiative fatigue, he suggested. From auto-enrolment to the recent Budget changes, he argued that schemes are finding it hard to keep up with the sheer volume of change, which means administration has slipped down the list of priorities.
“If you look at the agenda, 18 months to two years ago record keeping would have been one of the top five things on trustees’ agenda and there was a lot of noise coming from the regulator. Inevitably, it has fallen down the agenda.”
Third party administrators often lack the lines of communication into the companies
Rita Powell, managing director of Inside Pensions, agreed. She said that sometimes pinning down the right data could involve a “disproportionate” amount of effort. As an example, she gave checks on the temporary national insurance numbers used for employees who may have only worked for a company for a couple of years.
And the third party administrators, which are increasingly common, often lack the lines of communication into the companies which can be useful when sorting out historical problems.
The regulator is becoming less tolerant of excuses for poor record keeping
However, Warwick-Thompson’s comments indicate that the regulator is becoming less tolerant of excuses for poor record keeping. And with good reason, given that for the vast majority of DB schemes wanting to de-risk, decent quality records are a precondition for a good bulk annuities deal.
Simmonds said: “There are a small number of serial offenders out there that the regulator wants to chase down.”
“At some point you have to get past the education phase and accept that there are some that are not going to respond.
“Then it becomes a question of whether the regulator has the powers and resources to do the hitting.”