The General Code, TPR, and the great data challenge

Recent communications from The Pensions Regulator (TPR) to pension schemes have highlighted the critical need for trustees to monitor and improve scheme data.

TPR’s recent Digital, Data and Technology Strategy document emphasised good data being essential for leveraging technologies like artificial intelligence and other automated solutions.

However, improving data will bring schemes additional costs and administrative pressures. TPR has reinforced its expectation that schemes and sponsors must pay the market rates for rectification steps – a tough message for schemes to hear.

As a trustee, I’ve also experienced TPR’s increased focus on this issue. For schemes where annual reviews of common and scheme specific data (also known as ‘conditional data’) have not yet been completed, TPR is clear: the work must be done, regardless of other ongoing data projects. Evidence is also required through the annual scheme return process and non-compliance risks fines.

Data monitoring and improvements are also central to TPR’s General Code of Practice, so trustees will need to document their actions for their Own Risk Assessment and build this into their Effective System of Governance.

Taking proportionate action

To be effective trustees or pensions managers, we recommend capturing data together and put a holistic data action plan in place.

In practice, schemes may be looking at data through several scheme projects:

• TPR common data and scheme-specific data

• Pensions dashboards

• Guaranteed minimum pension (GMP) reconciliation and rectification

• GMP equalisation

• Pensions existence activity

• Buy-ins, and data cleansing before buyout

• Other scheme specific issues

• Defined contribution (DC) administration reviews

At Vidett, we’ve developed a data action log to support the data module in the General Code. Once set up, it can form part of the general Effective System of Governance maintenance work and should be easy to manage if recorded as a punchy summary and other data records are clearly signposted.

This document can serve as evidence for TPR, and the Own Risk Assessment process where applicable. For most schemes this would be a proportionate approach, with this activity added to the business plan and risk register documents as part of scheme internal controls.

Depending on the scheme’s size and projects, we recommend investing in a project or programme manager, to tie investigative and rectification work together where possible, and drive budget and time efficiencies with advisers.

Scenarios and examples

Action should be appropriate to the “size, complexity and nature of the scheme”, as per TPR – so it’s worth thinking about some specific scenarios.

For schemes that have conducted a buy-in, a data cleanse period will follow so this may not be required, but schemes may want to agree that upfront with TPR.

For small schemes with fewer than 100 members, there is no carve out so they will need a plan or to document why they’ve decided not to act. They will need a good reason.

For DC schemes, this will depend on the state of the data to and the reporting processes, so this may be a good time for schemes to appraise this.

Doing nothing is not an option!

TPR expects schemes to do the heavy lifting on data without compromise. While laudable in the long term, it will undoubtedly add to the existing defined benefit scheme burden.

Trustees and pensions managers must get an initial view on their data and put in place a system of management, but also look at their wider business plans, and build some synergies and control adviser activities and costs to mitigate the position.

Simon Lewis is a client director at Vidett.