On the go: The Pensions Regulator issued the Scottish Teachers’ Pension Scheme 2015 with an improvement notice earlier this year, following the scheme’s failure to provide benefit information statements to around 14,000 members.
This is the first time the watchdog has issued an improvement notice to a public service pension scheme, according to a regulatory intervention report published this month.
The scheme manager failed to provide benefit information statements – also known as annual benefit statements – to all relevant scheme members for the financial year 2016-2017.
Public service pension plans have to provide these statements to relevant members each year and within five months of the end of the scheme’s financial year. It is the scheme manager’s responsibility to do this.
The statements include important information about a member’s benefit entitlement, which they can use to make informed financial decisions, such as when they can retire.
The production of a benefit information statement is heavily dependent on a scheme keeping accurate data. If a scheme fails to provide these statements, it is often a sign that there may be wider record-keeping and governance failures.
Scottish Public Pensions Agency informed the regulator in July 2017 of the possibility of a failure to issue benefit information statements to all relevant members.
A month later, the scheme sent the regulator a breach of law report, and the scheme manager sent a plan outlining how and when they would remedy the failings.
This lead to the regulators formally opening a case to investigate the breach of law.
A warning notice was issued to the scheme manager in December last year, and the regulator issued an improvement notice in February 2018.
An improvement notice directs that a scheme manager, or a scheme trustee for other types of occupational pension plan, completes a series of steps to rectify failures in the scheme, or to stop taking inappropriate actions, within a specified timeframe.
The scheme planned to provide outstanding benefit information statements to members by March 31 2018, which was also the date for compliance with the improvement notice.
By April 30 2018, 98.7 per cent of relevant members were provided with the statements.
The watchdog stated in its report that it did not take action in this instance against particular participating employers. This is because it expects the scheme manager to take all appropriate steps to secure employer compliance using robust internal controls, and any powers granted to them by scheme regulations, prior to the regulator intervening.
“In the circumstances we were satisfied that the actions taken by the scheme manager were sufficient in these areas and that it would not have been reasonable or proportionate for us to exercise further powers at that time,” according to the report.
The regulator said its collaborative engagement with the SPPA meant the watchdog was able to educate them about its expectations, enabling them to produce a robust data improvement plan.
As part of this plan, the SPPA started a data cleanse exercise for all categories of members to ensure the member data it already held was accurate.
SPPA staff now have extensive engagement with employers, improving both the scheme manager’s understanding of the needs of the employers and employers’ understanding about their duties to the scheme.
