2020 will mark the 10th anniversary of The Pension Regulator’s (TPR) published guidance on record keeping and data management. At the start of October 2019, we saw TPR announce a crackdown on poor record-keeping, where the trustees of hundreds of pension schemes have been instructed to urgently review the data they hold, with the threat of improvement notices and fines of up to £50,000 if they fail to comply.
At The Tracing Group, we work with pension schemes to help them turn around their poor quality common data – in particular tracing members that have moved and failed to update the scheme with their details. We see first-hand that for many schemes, improving client data doesn’t just have to be about avoiding fines. If schemes choose to fully embrace the idea of data improvement and tackle it wholeheartedly with proper planning and consideration, there is much to be gained, both by the schemes and the members.
Poor quality data can reduce the reliability of mortality screening (a tool that many schemes rely upon to help prevent overpayments). When the data that is being checked for deaths contains errors or omissions, the chance of a unnotified death being missed in the mortality screening is increased. The costs associated with overpayments to deceased pensioners can be very significant, both in the payments themselves, but also in the administrative costs associated with recovering the payments. These can easily exceed the cost of improving the data in the first place.
Improving member data can highlight overpayments that have already been made, as well as reduce the risk of overpayment by improving the reliability of the mortality screening. It is also useful for schemes to know if deferred members have died, so that widows' entitlements can be setup if necessary and actuarial calculations can be more accurate.
Increased opportunity to engage with members via alternative platforms
Many schemes see the benefit of allowing members to engage with their pension online, via platforms and dedicated portals. Schemes also recognise the savings (financially and to the environment) of being able to engage electronically.
When schemes are improving member data, this is the ideal time to capture additional ways to communicate with members, such as email and mobile phone numbers. When undertaking large-scale tracing of deferred members, they could easily move several times more before they reach retirement age.
Be ready for risk transfer
It will come as no surprise that schemes which are considering a buy-out or buy-in will need to have their data in excellent shape. Being in a position to communicate with as many members as possible is vital and better data is more likely to result in a better valuation for the scheme too.
Meet your obligations to members
At the core of everything, is simply being able to meet the obligation to pay a pension to a member when it is due. If you don’t have the correct records for your members, there is a risk that you won’t be able to pay them what is due to them, when it is due – improving your data also helps scheme trustees sleep better knowing that they are doing what they set out to do!
For more information about how The Tracing Group could help your scheme to develop a data improvement plan, please contact Linda Jones Linda.email@example.com