TAKING INTEREST IN INFORMATION HELD BY YOUR PENSION SCHEME

The quality of membership data in a pension scheme is reflected by the service delivery of a pension scheme. Without accurate data the pension administration will be in inefficient. For trustees/directors of a pension scheme, checking that scheme member’s data is up to date is part of the job and is essential to achieve effective administration of a scheme. From the administrator to the actuary, from the auditor to the investment manager accurate data is a must-have if a pension scheme wants to operate effectively and delivering the retirement promise.

There is simply no element of a scheme that can be run without good data. Yet very often neither trustees nor members take a keen interest in the quality of information held by the pension scheme before retirement. It is amazing at how members struggle to get their information corrected before retirement benefits are paid and in many cases it is too late.

It is important for a member to disclose his or her correct personal details at point of joining the scheme. Many times people refuse to be retired arguing that they are too young to retire as the age used was just for the purposes for getting employed. It is important that correct details are provided for proper disbursement of the benefit at retirement. Upon receipt of the annual benefit statement members have the duty to validate the data on the statement and not to wait for retirement

On the other hand the pension administrators must ensure that accurate and up to date data exist for effective administration of the scheme. The administrators have a duty of providing accurate data for actuarial valuation and for the provision of annual benefit statements as required by  section 18 (c) of the Pension Scheme Regulation Act, 1996. Most pension schemes to date have benefited from the advancement in information technology by having pension administration software which keeps all the members records and calculates benefits in case of DB’s and provide the accumulated amounts in the case of DC’s. As with all computer software it output is dependent on the quality of inputs. Meaning that the software is just a cost effective way of storing membership data and not to improve the quality of the data feed into the system. The use of the software needs to be well managed as incorrect mapping can lead to data elements can be assigned to a wrong description i.e what you think is the date of birth could actually be the date the member joined the scheme or any one of the possible thousand permutations.

It is important that Trustees or administrators put in place a proper system of managing member’s data. Occasionally trustees/ scheme administrators should send the current data on every member to the concerned member asking them to agree it or make amendments that may be required. Through such exercise not only do you improve the quality of membership data but improve on transparency and confidence in the scheme by all beneficiaries. Though this data cleaning exercise can be viewed as expensive the cost of inaccurate information or lack of information is far much higher and will eventually damage the credibility of the scheme trustee/ administrators. 

Data quality is essential and an important yardstick for measuring the performance of a scheme. Whether DB or DC the investment patterns of a scheme needs to be matched with the liabilities of the scheme which are derived from the age distribution of a scheme. For instance it will not be prudent for a maturing scheme to invest in long term investments as the scheme needs a lot of liquidity to pay benefits which are due in the short term. This matching of assets and liabilities is a basis of pension provision as without it the pension scheme or system will be in disarray.

It is important that scheme members take a serious interest in the data held by the pension scheme in order to avoid problems at retirement. Pension providers have a duty to ensure that accurate and reliable data is held for each scheme member.

Information is key and your power to a better life in retirement.    

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