Among pension scheme administrators, the hot topic at the moment is data quality. The Pensions Regulator (TPR) has recently increased the number of fines issued to trustees for regulatory breaches, and they are now turning their attention on to the quality of scheme data. For the first time, the 2018 compulsory scheme returns will include information on the measurement of data quality. TPR has identified two categories of data that schemes hold for administration purposes:
Schemes will need to provide TPR with the proportion of members that are error-free in each data category.
The threat of fines is not the only reason to ensure that good-quality data is held. Poor data leads to extra administration tasks and reworking of benefits. Accurate data will also need to be supplied to the Pensions Dashboard in the future.
Data quality can deteriorate over time, particularly in pensions where data is often held for the majority of a person's working life.
When public sector pension schemes were calculated purely using final-salary benefits, there was no pressure to ensure accurate data until benefits were being calculated at retirement. The change to career-average benefits has meant a change in emphasis, with quality data being required on an ongoing basis. For many administrators, this has required a change in their relationship with the employers within the fund.
The constant communication between fund and employer has led to the need to review data continually. This leads to a drain on resources and operational efficiency. Using an external provider ensures funds save resources, time and effort, improving processes and efficiency while also ensuring their data is validated by an external organisation.
Of all the administration centres that have used Aquila Heywood's Data Quality Service so far, several interesting statistics and facts have been revealed:
Aquila Heywood's Data Quality service ensures Pension Funds can maintain a high quality of data. All schemes must now place more importance on data quality, as industry regulators increase their demands in this area. Schemes that can meet these demands quickly will save costs and reduce the risk of non-compliance to any future legislative changes.