15 October 2008

  eShare calls on Regulator to widen

scope of Record-Keeping

In their response to the Pensions Regulator’s consultation on record-keeping, eShare has requested that the Regulator also provides guidance to highlight the importance of scheme documentation to the good governance of pension schemes.

In July, the Regulator issued a consultation paper on record-keeping and requested responses by 15 October 2008.  The paper focussed primarily on the benefits of maintaining quality member records.  However scheme records extend much further than member data.  Scheme records include the scheme constitution and rules, benefit history and documentation, policies, processes, historic decisions and precedents and many other items.

The consultation paper highlighted the fact that inability to maintain good member records resulted in additional costs, claims from members, lack of confidence and inaccurate valuations .  However the risks associated with incorrect documentation not only include all of these but can be much worse.  Incorrect, out of date or incomplete documentation can lead to scenarios where large groups of member all receive incorrect pensions.  In addition, poor scheme documentation can affect almost every aspect of scheme governance resulting in poorly made decisions, badly managed risks and a general low standard of governance.

eShare have therefore called for The Regulator to address this issue and ensure scheme documentation is kept to certain standards in line with member records.

“It’s a noble mission to improve the quality of member data, however if we don’t use that data correctly, it is largely conducted in vain,” said Alister Esam, Managing Director of eShare,  “Looking more broadly, to perform quality administration, to make good decisions, reduce risks and do all the good things the Regulator wishes to see, Trustee and others need to have the right information on which to base their actions.”

“Most schemes are well run but in some schemes we often find incomplete documentation, uncertainty over document versions, inconsistent documentation, poor accessibility of documents,” said Esam, “At least member records are usually held by one party in one place.  However, with generic scheme records and documentation they could sit with anyone of a number of people at any one of a number of locations.”

Even where documentation exists it’s not always with the people who need it.  Rather than being effectively shared it often sits in a file behind a pensions manger’s desk.  The pension manager simply doesn’t have time to ensure the right people have a copy at the right time.  For trustees, the situation can be worse.  A trustee often might not be aware a relevant document exists, so the chances of them knowing who looks after that document and then obtaining a copy can be minimal.

eShare’s response highlighting the issue of poor record-keeping can be read here http://www.eshareuk.com/Documents/Press%20Releases/2008%2009%2022%20TPR%20Consultation.pdf

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