For the first time, The Pensions Regulator (TPR) is asking schemes to submit information around data as part of the annual scheme return. The watchdog's Anthony Raymond explains what changes are being made and why trustees and administrators should start taking data more seriously.
Gathering data about a pension scheme is not a 'nice to have' - it's mandatory and an essential part of making sure that a scheme is being run well.
To help those who run schemes understand their duties, we are being clearer about the type of data we expect to see. We're even renaming 'conditional' data as 'scheme-specific data' to help remove some of the misunderstanding we know exists.
While gathering data is not optional, exactly what data schemes need to measure is specific to each individual scheme, hence the name change.
But the list might include: employment records such as an employer's name, salary records and service history; employee and employer contribution history; investment decisions; or any benefit specifics like GMP entitlement, HMRC protections or cash entitlements.
There should also be an understanding of why some data isn't relevant to a scheme so doesn't need to be collected or measured. For example, benefits may be calculated based on the highest salary earned within the last five years (or the five years prior to leaving) so the scheme doesn't need to keep older pensionable salary information.
Trustees and their scheme administrator must work together to build a list of scheme-specific data, which helps to assess how well the scheme is running. They should also agree why they consider each data area to be key.
Schemes also need to measure common data. This is the list of details about scheme members so they can be identified and includes a member's surname, date of birth, national insurance number, address and what age a member is expected to retire.
It's essential that trustees understand and measure their data so they can take action to improve it and minimise risks to the scheme.
Changes to the scheme return
For the first time we are asking pension schemes to report their common and scheme-specific data scores in the scheme return. Defined benefit scheme return notices will be issued from January 2018 and defined contribution scheme return notices from summer 2018.
In the scheme return we will be asking two additional questions around each area of data: when was the last data review and what a scheme's data score is. The data score is the percentage of members for which the scheme has full and accurate common or scheme-specific data.
To be clear, these are not new requirements. We set out our expectations on data measurement in guidance in 2010. But there are good reasons to ask for this data. If we know where schemes are struggling with record keeping we can educate and intervene more effectively. It will also help us track the progress of a scheme over time.
On a wider scale it will also better inform us of record keeping standards across the trust-based pension landscape as we strive to improve the quality of record-keeping.
To support schemes we're putting together a new Quick Guide to Measuring Data, including how to calculate a data score, which will be available on our website from November. A Quick Guide to Record Keeping is already available.
We will also be answering some frequently asked questions around data collection at the end of the scheme return checklist, which tells trustees and administrators what's changed on the scheme return. We know from our research that administration is often not seen as a priority by trustees however it must be taken seriously.
Our experience shows us time and time again that good administration links to better outcomes for members. It makes sure they receive the right benefits at the right time. As the regulator it is our role to protect workplace savers and that means making sure that schemes are meeting expected standards.
Poor data can also be costly for schemes, both in terms of extra administration costs and putting things right.
If schemes are not already meeting these standards they need to start doing so. We're not going to act immediately if scores are low and trustees and administrators are honest about it, but we will if they don't take measures to improve.
Anthony Raymond is acting executive director for regulatory policy at The Pensions Regulator
