Trustees need to act on data quality

12 July, 2010

Trustees and sponsors underestimate the importance of data quality as a risk facing their schemes, despite the Pensions Regulator’s emphasis on improving standards, according to MetLife Assurance.

MetLife Assurance said the risk posed by poor data quality ranked 16th out of 18 factors in its UK Pension Risk Behaviour Index, which assesses the importance trustees and scheme sponsors place on investment, liability and business risks affecting pension schemes. Despite this, respondents ranked data 6th out of 18 in how well they are managing the risk.

Emma Watkins, head of relationship management at MetLife Assurance Limited, said: “Our research potentially indicates that trustees consider the risk posed by data quality to be of relatively less importance because they believe they are managing it well. Whether this is true depends on their measure of success.

“If it is on the basis of the number of member complaints being received then this might be misleading and a better barometer of success could be the readiness of the scheme to complete a PPF assessment, for example.”

While the Regulator has set a December 2012 deadline to improve record-keeping standards, Watkins said schemes should act sooner rather than later – especially schemes looking to de-risk – although there would inevitably be some schemes where complying by the deadline would be ”unachievable”.

She added: “In either case the trustees should consider implementation of a relevant data recovery plan to help them identify any data issues that exist and the required mitigating actions. This would demonstrate to regulators that they are taking steps to manage the associated risks.”