Professional Pensions Admin Panel January 2011
What do you see as being the key challenges facing schemes and their administrators over the coming twelve months?
The economic climate and its impact on both employer covenant and investment returns could lead to schemes looking to derisk through transfer value and pension increase exchange exercises and also looking at buy in and buy out. Administrators can add significant value to such exercises through their experience and it is therefore worthwhile involving them in these discussions at an early stage.
There is the immediate challenge of the transition from RPI to CPI and the forthcoming tax relief changes with the need for schemes and administrators to implement these changes quickly
There is also the challenge of auto-enrolment, with the initial schemes being implemented in 2012. Employers need to consider this challenge and the impact on their existing arrangements. Indeed this may be a good time to consider outsourcing the administration of any remaining legacy schemes that are administered in-house, which would enable the focus of in-house personnel to be concentrated upon the future pension provision for the employer following the introduction of auto-enrolment.
Earlier in the year the Regulator issued guidance on record keeping – do you see the regulator taking further steps over the coming year to ensure scheme data is kept up to date?
Whilst the guidance currently issued relates only to common items of data, it is generally expected that conditional data will follow at some point. Indeed it could be seen to be the logical next step.
However, the Regulator has seen the merits in taking this one step at a time and will need to review how the basic data requirements have been dealt with and conduct initial audits to determine how the industry has embraced the initial guidance once the deadline of 2012 has been reached before moving on to tackle the thornier, inevitably more taxing and time consuming issue of conditional data.
Experience has shown that trustee boards have only recently begun to work with their administrators in focusing on the initial guidance and specifying additional requirements in advance of the deadline for common items could create an element of confusion.
How often do you feel schemes should carry out data cleanses? Should it be an annual event, or should it be more regular?
Data changes and that’s a fact. No matter how much cleansing you do today, tomorrow that data may and probably will change. Data cleansing needs to be an ongoing activity and accepted as business as usual yet there will be certain events that create a greater need for data cleansing. Perhaps it is important to define exactly what we mean by data cleansing and what data correction is.
It’s like doing housework. Most of us, on a weekly basis, dust the mantelpiece, wash the bedding and vacuum the carpets. This is business as usual activity. However, every so often it’s time for a spring clean when every piece of furniture is moved, floors are washed and wardrobes re-organised. This is the real cleansing activity. In the terms of data management the weekly housework is data correction. Items of wrong data that are found as part of the day to day administration are corrected as an administrator goes along. But every so often a particular piece of work comes along that requires a more thorough data correction, or data cleanse. These will often be as a result of a particular scheme initiative, such as a buy out or ETV exercise. So the frequency of these will be dictated by the timing of the projects. But as a minimum, like spring cleaning your house, schemes should adopt an annual data cleanse.
by Daniel Jacobson
Client Manager