Scheme Record Keeping

i)
Awareness of the regulator’s guidance has remained very high and in line with last year
In 94% of schemes, the administrator was aware of the regulator’s record keeping guidance. Only 53% of administrators of micro schemes were aware compared to 99% of the largest schemes. This proportion is also lower for contract-based schemes (75%) than trust-based schemes (98%). The proportion of schemes overall with administrators who are aware of the guidance is consistent with 2011 (95%) and 2010 (93%), however the proportion of small and medium schemes who are aware of the guidance has dropped (from 80% in 2011 to 61% in 2012 and from 96% in 2011 to 84% in 2012 respectively). It is important to note however that this has not had an adverse impact on these schemes’ behaviour, as a higher proportion of these schemes are now following the record keeping guidelines and it may be reflective of the fact that adherence to the guidelines is simply becoming ‘business as usual’.

ii)
Proportion of schemes with processes in place or planned to measure common data has increased substantially from last year, as has administrator knowledge of their scheme common data score and the proportion of schemes with a score above 90% Overall, four in five schemes (82%) have processes in place to measure common data and a further fourteen per cent have plans in place to ensure that common data will be measured. The proportion with processes in place has increased across all scheme types over the last two years, with the exception of contract based schemes where it has remained consistent. This proportion has also increased across scheme size. Two-thirds (66%) of schemes overall know their common data score, compared to one-third (33%) who knew in 2011. This is highest among hybrid schemes (74%) and lowest among contract schemes (55%). Likewise, the proportion of schemes with a score above 90% has increased from 2011; with just under a half of schemes (47%) recording such an increase, this has increased most markedly amongst hybrid schemes (from 28% in 2011 to 53% in 2012). The mean average common data score has remained consistent for trust based schemes (at 92) and has increased slightly for contract schemes (97% up from 95% in 2011). This demonstrates that although a lower proportion of contract schemes compared to other scheme types have processes in place to measure common data and know their score, those that do have processes in place and know their score are performing well.

iii)
Knowledge of the conditional data score remains lower than for the common data score, however the proportion of schemes with processes in place or planned to measure conditional data has increased, along with the proportion who know their score and have a score above 90%
Just over half of schemes (55%) have processes in place to measure conditional data (up from 45% a year ago in 2011) and a further 32% have plans in place to ensure that conditional data will be measured. The proportions of contract and hybrid schemes which have processes in place have increased since 2011 (from 48% to 66% and from 39% to 52% respectively). Small and medium schemes particularly have also seen an increase in schemes with processes in place (from 45% to 69% in the case of small schemes and from 43% to 71% in the case of medium schemes). Across all scheme types there has been a substantial reduction in the proportion answering ‘don’t know’ since 2011, with more schemes now knowing their score (37% compared to 16% in 2011 and 2010). This appears to indicate that, even if processes are not yet in place, at least the principle of putting processes in place to measure conditional data is more readily understood. The mean conditional data score has decreased slightly among both trust and contract-based schemes (from 92% to 87% in the case of trust-based schemes and from 97% to 96% in the case of contract-based schemes). However, this may simply be the result of more schemes now measuring their conditional data score.

iv)
Smaller schemes tend to produce administration reports less frequently
Due to a change in the question wording for the 2012 survey it is hard to compare results directly with previous surveys. Given that the question was made more specific to ask about the frequency of administration reports ‘on the accuracy of record keeping’ the provision of administration reports on a quarterly basis (54%) has dropped compared to 2011 (80%) and 2010 (83%). Two-thirds of schemes are producing reports on the accuracy of record keeping every six months (67%) and a further fifth (21%) at least once a year. The smaller schemes tend to receive administration reports much less frequently, 12% of micro schemes report at least quarterly compared to 62% of the large/extra large schemes. This follows the same pattern as in 2011.

v)
The proportion of administrators attending trustee meetings on a regular basis has increased the small schemes showing a lower frequency of administrator attendance at trustee meetings
For 83% of schemes, administrators attend trustee meetings at least every six months, an increase from 77% in 2011. For 11% they attend at least annually and for two per cent they attend at least once every three years, for the remaining four percent of cases administrators never attend these meetings. There is a strong association between the frequency of administrator attendance at trustee meetings and the size of the scheme. Only 44% of small schemes – and just 14% of micro schemes – report that administrators attend trustee meetings at least every six months compared to 71% of medium schemes and 85% of large/extra large schemes. Finally, the frequency is lower where the administrator is not aware of the guidance (59% that attend at least every six months) compared to schemes where the administrator has read the regulator’s guidance on record keeping (83% that attend at least every six months).

vi)
The majority of administrators now say that in the last 12 months they have alerted the scheme trustees to a common or other data problem
Although in 2011 only 27% of schemes reported a common data problem and 15% ‘another data problem’, in 2012 half of schemes (50%) reported a common data problem and a further quarter (26%) reported another data problem. This rise however appears to be indicative of the fact that more schemes are now measuring common data and so it follows that more data problems will be uncovered. Administrators of larger schemes are more likely to have alerted trustees to a data problem than for smaller schemes, for example, administrators of 51% of large/extra large schemes alerted trustees to common data problems, compared to only 5% of all micro schemes.

vii)
In general the smaller schemes have a lower level of optimal record keeping behaviour
When analysing whether schemes are aware of the guidelines or if they have processes in place we can profile schemes that typically exhibit ‘non-compliant’ behaviour. Contract based schemes are more likely to have administrators that are unaware of the record keeping guidance (73%), as are micro (13%) and small (35%) schemes. DB schemes are most likely to have no processes in place or planned to measure common data (56%), as are micro (21%), small (13%) and in particular medium (65%) sized schemes.

viii)
Trustees are confident that they are able to assess the quality of administrators service
Overall 81% of schemes assess the quality of the service provided by their administrator at least annually. Around two-thirds of schemes (62%) assess quality at least every six months (up from one-third in 2011, 35%). Almost all schemes are confident (60% very confident, 37% quite confident) that the trustee board is able to assess the quality of service provided by the scheme administrator.

ix)
Trustees are aware of and engaged with the record keeping guidance
Almost all schemes (99%) were aware of the guidance, as in 2011, with indications that awareness increases with size of scheme. When compared to the administrator responses from the main survey there is a very high level of consistency. For 99% of schemes both the trustee and administrator were aware of the guidance. Nine in ten trustees had read and engaged with the guidance to some degree (89%), and compared to 2011 there has been a significant increase in the proportion of schemes with a trustee that have read the guidance in detail and taken action (67% up from 45% in 2011).

x)
More trustees are being alerted to data problems by their scheme administrators
Almost three-quarters of schemes (72%) had been alerted to data problems by their scheme administrator (an increase from one-third (36%) in 2011). Consistent with 2011, in two-thirds of schemes (66%) where an administrator and a trustee were able to be compared, agreed with each other regarding a data problem alert in the last 12 months.

xi)
Some trustee boards do not think they are solely accountable for the record keeping of the scheme
There is a significant body of law which requires good scheme records to be kept. For trust-based schemes the ‘duty to account’ (which requires trustees to keep adequate records about their management of the trust, and to provide these records to their beneficiary) is a fundamental obligation. There is case law stating that a trustee who fails to keep proper records ‘exposes themselves to grave risks.’ However, our research shows that 13% of trustees interviewed believe that they are not solely accountable for record keeping which highlights a high level of misconception also seen in 2011 where 15% of trustees believed this. Only 61% of schemes strongly agreed.