The Pensions Regulator - consultation on record keeping
28 July 2008
The Pensions Regulator has issued its consultation paper on record keeping suggesting that this should be much higher on many schemes' agendas. The paper places new focus on the importance of good records with the Regulator commenting that "Holding good data is a prerequisite to providers and trustees discharging their fiduciary and statutory obligations to administer a scheme properly". Burges Salmon is engaged in that consultation and seeks your views.
Underlying Principles. The Regulator summarises the principles underlying its approach as follows:
- Members should be entitled to accurate information about their pension rights
- Members may not receive the correct benefits if records are incorrect
- Poor quality record-keeping leads to additional costs
- Good record-keeping supports better decision-making – by members, trustees, and employers on, for example, valuations and funding
- Better member understanding is the most desirable means of encouraging better record-keeping. We support initiatives such as web access that improve members’ access to, and understanding of, their pension rights
- Buy-outs are likely to be more expensive where there is doubt over the quality of records in a DB scheme
A central proposal – Core and Additional data
A central proposal by the Regulator is its recommendation that all schemes hold core data and that additional data be kept on a scheme specific basis, adding that "The regulator is recommending that trustees and providers measure the presence of the additional data required for effective administration; and that, where necessary, trustees and providers develop a plan for improving it".
Burges Salmon Partner Clive Pugh comments "The Regulator's central proposal is for there to be a set of core data together with additional data specific to your scheme. Fundamental questions that arise are precisely who will bear which duties and will the onus in practice be mainly on trustees or providers. A clear steer giving certainty on trustee and provider responsibility is key".
On one view the proposed flexibility in respect of additional data may be helpful. However, whilst there is clarity about the Regulator's expectations on core data, trustees and provider may feel that there is real uncertainty as to whether they have complied with the additional requirements. There may therefore be arguments for clearer and more definite guidance in relation to these proposals. In addition small and medium sized schemes may find compliance with a flexible approach to be unduely costly and require additional management time.
We seek your views, including on:
- How the responsibility for record keeping should be allocated between trustees and providers
- Is the scheme specific proposal for additional data the right approach? Is this flexibility welcomed or should there be more certainty for all
- Should there be more precise guidelines for certain types of schemes, for example smaller and medium schemes
- Whether web based member reporting is appropriate and cost efficient for your schemes