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    Pension scheme record-keeping: Conditional data will set you free

    By Tom Nimmo on Friday, December 09, 2016

    I do not mean to be all evangelical or anything, but I do seem to end up banging on about the need for better pensions data management practices far more than seems reasonable or necessary. I wrote my first blog on pension scheme record-keeping over six years ago. That means that at the time of writing, I’m 78 months into the same rant and the only thing that makes that first blog any less relevant to today is that the audit tool we now use is far more sophisticated. The fact that I’m still writing about a call to action on pension scheme data quality is a sad indictment of the industry, when you consider how much could have been achieved in six years - the Burj Khalifa, the Space Shuttle and the Channel Tunnel were all completed in less time!

    This time around, I’m back on my high horse after reading over the Pension Regulator’s (tPR) Record Keeping Survey 2016. In particular, this passage really stood out for me:

    “Administrators’ understanding of the terms ‘common data’ and ‘conditional data’ was not universal. Conditional data was clearly seen as secondary to common data.”

    The idea that conditional data is less important than common data is just plain wrong, and the trend revealed by tPR’s survey is concerning, if not particularly surprising. My concern is centred on the fact that even though tPR does not set conditional data quality targets, it should be self evident to all involved in the governance or servicing of pension schemes that conditional data is critically important. It’s the data that - amongst other things - allows the correct benefits to be paid to the correct members at the correct time. It is data that is conditional only because it can differ between individual pension schemes, but good data quality should be treated as an absolute, unconditional requirement that must be obeyed in all circumstances and is justified as an end in itself.

    The idea that conditional data is of lesser importance was never the intended message of tPR, and so it should come as no surprise that off the back of the latest record keeping survey, tPR has issued some revised guidance to address this misconception and others. More importantly, the guidance shows that tPR is stepping up the regulatory requirements to monitor and improve data quality across pension scheme records. Going forward, trustees must include data quality scores in their scheme returns, pension scheme data audits should be completed at least annually and data rectification plans need to be in place, where issues have been identified. Furthermore, trustees should have processes and structures in place to scrutinise their administrators and they should not be relying on their auditors to identify pension scheme data issues.

    All of the rhetoric points to a single conclusion. Trustees should:

    • Complete pension scheme data audits that cover common and conditional data items and engage with an independent data audit provider, rather than the pension schemes’ administrators to do so.
    • Ensure that the data audits are objective, transparent and repeatable so that they align with pension schemes’ objectives and allow regular, ongoing monitoring of pension scheme data quality.
    • Ensure that the data audits and accompanying reports are comprehensive and detailed, to allow pragmatic decisions to be made about the maintenance of data quality standards and the rectification of data quality issues.

    That concludes the rant, but not the discussion. Beyond the regulatory stick that is being wielded by tPR, as I’ve previously mentioned, pension scheme data audits are an end in themselves. My next blog will emphasise some of the inherent benefits of pension scheme data audits and how they can provide wide ranging benefits to pension schemes.

    In the meantime, if you are interested to see what real time data audit results look like, simply set yourself up with demonstration login credentials for our award winning pension scheme administration system, Mantle® and take a peek.

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