Action is a must

‘Reasons given for the limited progress were mainly to do with the economic climate, cost or resource constraints, competing business priorities....’ -  this is included in the “Summary of responses” the Regulator (tPR) published following its 2010 consultation on the Record Keeping Guidance issued in early 2009.

tPR has been concerned about the lack of concrete action taken by schemes to improve the standard of record-keeping and its revised guidance issued in June 2010 makes it clear that it is moving to an ‘investigate and enforce’ regime.  The comments received during the consultation have been taken on board by tPR, but targets have been established that all schemes must now strive to achieve.

Targets

The targets for Common Data are 100% for new data after June 2010 and 95% for legacy data prior to that date.  These targets are to be achieved by December 2012.  Targets for other data that should be held are scheme specific.

tPR has stated that ‘Schemes should use all reasonable endeavours to resolve outstanding data issues and need to have plans in place to improve the state of data held if it is not at the highest standard.’

Practical steps

Taking action does not need to be costly or time consuming, but the first step must be to establish the quality of your legacy records and understand how new records are being created and managed.  Our view is that the following steps are an essential foundation for the development of a robust action plan:

• Ask your administrator, whether it be a third party or in-house, what action is being taken in response to the tPR’s guidance;
• Identify responsibilities for any additional actions that may be required;
• Establish a reporting framework with your administrator to either monitor on-going compliance and/or the progress of any remedial work being undertaken;
• Ensure that your internal control processes properly reflect the steps that you have taken – these should, of course be subject to on-going review and development in any event; and
• Communicate with your other advisers to ask them if they are aware of any issues in relation to record-keeping.  Your statutory auditor, for example, whilst not required to examine member records, should report to you any weaknesses of which they are aware.

Positive attitude

Good administration records are a benefit to the scheme.  For a defined benefit scheme it may help with de-risking and liability management exercises such as buy-out where good records will usually reduce the premiums payable.  

For defined contribution schemes, there is potentially a high cost to put data right later.
There are many good reasons to address this issue and a planned approach to resolution can minimise the cost and enable any required work to be undertaken concurrently with other projects.