PENSIONS INSIGHT
Pension data accuracy
A roundtable was held on 13 September in Committee room 2A House of Lords. Mike Nicholas reports
T he roundtable, which was hosted by Baroness Ros Altmann on behalf of the CIPP, pensionsync and Reward Strategy, was attended by an extensive list of individuals representing the payroll and pension industries. A reception event held after the roundtable evening brought more luminaries. Ros opened the roundtable explaining the concerns about pension data accuracy and how the pensions of millions of savers could be affected by errors and omissions in the data. Over time, as employers cease, schemes windup, people change pension funds creating multiple pension pots, and master trusts consolidate, lack of data accuracy will become critical unless action is taken soon. The Department for Work and Pensions estimates that by 2050 the number of abandoned pension pots could reach fifty million. Ken Pullar FCIPP (CIPP chief executive officer (CEO)), Jill Smith MCIPPdip (CIPP policy manager), Neil Esslemont (The Pensions Regulator), and Will Lovegrove (pensionsync CEO), all addressed the meeting commenting on the issues. Attendees were then invited to join the discussion focusing on the causes of inaccurate automatic enrolment (AE) data submissions, the impact on the pensions market and setting out ways to improve data reliability and security. In her closing remarks Ros confirmed that further discussion will ensue to develop and carry forward measures to address data accuracy issues. Discussion issues The requirement to send or refer data back to its source implies that the administration of workplace pensions is inefficient, resulting in increased costs for employers, payroll firms, book-keepers, other third-party providers and also for pension providers in
terms of customer support. With high error rates commonplace, the costs of pension administration and the time taken to submit the information to pension providers is much greater than necessary.
pension data are accurate and reliable because over time and if schemes merge it will be much more difficult to reconcile past records. Though it will never be possible to ensure 100% accuracy, having automation processes in place which constantly check and allow errors to be corrected promptly, will bring pensions administration into the 21st century. This can also ensure greater reliability, security and lower costs. Research findings Attendees were given copies of the research by pensionsync which exposes high error rates in AE data for small firms. The legislation only checks employers are paying into a scheme, not the accuracy of information held which begs the question whether pension records are already inaccurate under AE. Though employees expect their employer and/or pension provider to ensure accuracy in the amounts being recorded, there are continuing failings even with new pension schemes. Analysis of data representing contributions to over 10,000 schemes reveals that data sent on behalf of employers to pension providers have a high error rate causing returns to employers for correction. Such rates suggest the need for greater attention to be paid to data accuracy by pension administrators and/or employers themselves. (See Success rates and errors, below.) Among the common errors found by pensionsync are: contribution amounts being too high or too low or being made for workers who do not belong to the scheme or have opted out; and incorrect pay period dates. Other examples of pension administration errors stem from employers or their agents incorrectly understanding or believing a pension scheme operates tax relief-at-source rather than the net pay
...data sent on behalf of employers to
It is also worrying that some administrators ‘fudge’ pension information by editing it within spreadsheet or word processing software to get the job done rather than addressing the root causes of the data errors within the source (typically payroll) software. In situations where payroll software is not updated to reflect changes made by pension providers to data requirements, administrators may have little choice but to adjust the data in a spreadsheet or key data directly into a pension provider’s web portal. The AE declaration of compliance does not require confirmation that the pension contributions and employee pension records have been robustly verified as accurate, with little if any checking of member data accuracy by most providers. Indeed, many providers could not even check whether contributions are correct if they wanted to, because they do not collect the relevant information on employee pay. With some pension master trusts in the process of consolidation, the risks of pension records already being incorrect are worrying. Master trust authorisation did not require robust checks on data accuracy or proof that there are proper processes to discover and correct errors. It is essential that processes are urgently introduced to regularly check pension providers have a high error rate...
| Professional in Payroll, Pensions and Reward | November 2018 | Issue 45 32
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