The Pensions Regulator

Regulator stresses importance of good record-keeping

Ref: PN08-16
23 July 2008

The Pensions Regulator has stressed the importance of good record-keeping in the governance of pension schemes in a consultation launched today – aimed at those responsible for record-keeping and those who administer schemes.

The regulator acknowledges that there are some schemes and providers which achieve high standards. However, evidence suggests that there is certainly scope for improvement in standards of record-keeping, and that this is true irrespective of size or type of scheme. The main problem areas we have found include poor legacy data and limited appreciation of the importance of good record-keeping.

Poor record-keeping can lead to significant additional costs in a number of areas, such as higher costs during buy-outs or wind-up, more expensive administration, claims from disgruntled members, and inaccurate actuarial valuations. These costs are ultimately borne by members, the employer, or both.

The regulator's consultation calls for views on some specific steps, to be implemented by providers and trustees, which the regulator recommends as good practice:

• testing for the presence of core information about every member of work based pension schemes;
• whether trustees or providers should identify and measure additional information required to administer their particular scheme; and
• if necessary, develop a plan which will obtain missing information.

We also call for feedback on proposals to include the importance of data, record-keeping and checking data integrity in our e-learning programme the Trustee toolkit, and including administration in its own right in the Scope for trustee knowledge and understanding.

Pensions Regulator chief Executive Tony Hobman said: “The quality of record-keeping has a huge impact on all aspects of administration of a pension scheme. We wish to raise awareness of this essential aspect of pension scheme governance and welcome views on the approach set out in the consultation document.”

Editor's notes

1. The twelve-week consultation period ends on 15 October.
2. The proposed regulatory approach to record-keeping is to educate, enable, and if necessary at a later stage, enforce, using those powers available to the regulator.
3. The Pensions Regulator is the regulator of work-based pension schemes in the UK, with objectives to protect members' benefits, promote good administration and reduce the risk of calls on the Pension Protection Fund. Our approach is risk-based focusing on education and enablement, with enforcement where appropriate. We have the ability to:
   • collect information about pension schemes; through scheme returns, under the scheme funding regime and as well as statutory (including whistleblowing) reports;
   • issue notices requiring actions to tackle non-compliance, prohibit trustees who are judged not fit and proper to carry out their duties or appoint independent trustees;
   • direct pension schemes as to how to calculate their liabilities and the contributions required;
   • issue a contribution notice where there is a deliberate attempt to avoid liabilities, or a financial support direction where the employer is a service company or insufficiently resourced.