Professional Pensions Admin Panel September 2010
The Regulator makes a clear distinction between new data and legacy data in its setting of targets for 2012. What, if any, progress has been made across the industry in terms of assessing the quality of legacy data, including paper files? Is the target of 95% target achievable within the 2012 timescale?
It is not so much a question as to whether the 95% target is achievable, it has to be achieved.
Our experience has shown that trustee boards are now recognising the issues and are starting to work with their Administrator. It is however apparent that a wide disparity exists across the industry from Trustee boards that have identified and addressed any issues to some that are only beginning to understand the requirements.
A key activity that will focus the Trustee board on meeting the deadline is the work necessary at valuation time. Gaps in data should become apparent and can be dealt with as part of the valuation process. In addition, administrators have the opportunity to take the initiative and work with Trustee Boards to highlight and examine problem areas with the aim of seeking to rectify these in advance of the 2012 deadline.
Conditional data is essential for determining members actual benefits and arguably more important than Common data. However, specific targets were only set against Common data. How could the Regulator have focused more on Conditional data rather than Common data as it has done?
Given the size of the challenge and the importance of industry engagement the Regulator has taken a sensible approach in taking one step at a time. Whilst the industry expects conditional data targets to follow, basic data issues need to be addressed first, so that processes can be put in place and then subsequently refined to deal with the thornier and more taxing issue of conditional data.
A “mid term” review is also sensible to evaluate how the industry has embraced the basic data requirements. This review will also give an indication of how much work will be involved in dealing with the conditional data elements before progressing to the next stage which is likely to be more complex and technologically demanding.
What actions could administrators take to ensure that proper controls are in place to ensure that new data created after June 2010 is accurate and complete for both Common and Conditional data? What role do employers’ Payroll or HR departments have to play in this?
At the end of the day, the trustee is the owner of the data and they need to satisfy themselves that the correct controls, processes and procedures are in place to ensure accurate and complete data.
Administrators can carry out internal audits and this, coupled with reports on internal controls such as the AAF 01/06 can provide the necessary comfort to the trustee. Regular stewardship reporting can also assist by examining specific areas and work can be carried out as part of regular exercises, such as Scheme valuations and IAS19 reporting.
In addition, trustees can also commission the Scheme’s auditor to not only examine the administrator’s records, but also to examine the employer’s end of the process, by looking at the HR, payroll and data transmission processes.
The Regulator is exploring with the auditing community whether its record-keeping guidance can be supported by the statutory audit process. What role should scheme auditors be playing in making trustees accountable for the quality of their data?
It is apparent that statutory examinations are coming and the industry needs to be prepared for this. The impact will become clear as the Regulator issues enforcement action and penalties on the back of these audits.
Auditors can look to incorporate this as part of the regular audit process, with not only the data being received during the year, but also the salary and benefit calculations themselves being audited.
They could also place reliance on the reports on internal controls, such as AAF 01/06 that have been supplied to them and recommend that data integrity reporting be commissioned, although the responsible administrator should already be reporting to Trustee boards on this and consequently this could be made available to the auditors.
by Daniel Jacobson
Client Manager