A stable and secure retirement is the base aspiration for anyone of working age in the UK, especially so for those working in the public sector, who may not be earning as much as they could potentially in the private sector, however the latest report published by the Pensions Regulator paints a very different picture.
The watchdog, who regulate public service schemes providing pensions for 16.7 million people across many sectors including local government, NHS, teachers and members of the armed forces, noted its disappointment that just 20% of schemes impose penalties where administrators fall short of service or contractual standard.
The report also criticised the rise in the number of schemes that disclosed inadequate processes for monitoring data accuracy and completeness. Fifteen percent of schemes did not have these in place, up from 11% in 2016.
Daniel Taylor, director at Trafalgar House, said the regulator’s findings were a “damning testament of the industry.”
In the report, the regulator said; “Scheme managers should be aware that we are more likely to use our enforcement powers this year.” However, Daniel Taylor questioned the effectiveness of levying fines to regulate the industry. “I think setting more ambitious targets for schemes is absolutely essential,” he said, adding that schemes must implement improved administration infrastructure.
This point raised is one that is very close to our heart at eShare. The pension’s crisis in 2004 was what prompted our founder, Alister Esam, into forming eShare and its board portal solution, BoardPacks, to help combat the mismanagement of pension funds by rogue board members.
In the ten plus years since eShare’s creation, we would like to think that this kind of outdated attitude to directorship has been well and truly consigned to the past, however recent findings appear to indicate the opposite. The Pensions Regulator has found that pension board meetings took place less than quarterly at 43% of schemes in the first quarter of 2018. This figure just frankly isn’t acceptable when you consider these meetings are discussing matters that directly impact the lives of their employees.
Meetings are abused across all levels of a business, often poorly organised, run without agenda and not properly documented which is what causes much of our frustrations towards meetings. These poor practices should now be a thing of the past with the plethora of meeting solutions on the market, the value of these different solutions is a different argument for another time, however, to think that board meetings are still being run without the correct structure and measures is bordering on criminal.
When boards meet only once a quarter, it’s essential to make the most of every single second in order to make decisions and progress any critical business matters. If the boards aren’t meeting at all, then that obviously raises major concerns, but when they do meet it’s imperative that there is a way of tracking and documenting these meetings for full transparency and accountability when it comes for them to be audited, also to demonstrate that the directors are earning their keep.
Whilst this may sound like an impossible task, it is possible if using the right board portal solution. Being able to track director attendance, along with tracking which documents they have opened and how long for goes a long way to proving the dedication of directors. Equally, knowing that this tracking is available might make those less dedicated members pull their socks up.
Implementing new technologies can answer so many of the problems that pension boards are facing right now, whether that be improving efficiencies, providing greater transparency or providing a clear audit trail effortlessly, yet not enough of these schemes are seizing this opportunity to improve.
The regulator’s report highlights that nearly one in five scheme did not perform a data review in the past 12 months, with a further 8% unsure if they had done so. Joe Dabrowski, head of governance and investment at the Pensions and Lifetime Savings Association, identified data reporting as “the most crucial” area for Local Government Pension Schemes to improve.
“The challenge over data reporting has been exacerbated by the recent unprecedented rise in employers within LGPS, alongside budgetary challenges in recent years,” he said.
Total LGPS membership grew to 5.6m members in 2017, up from 5.2m in 2016, according to the LGPS advisory board. Over 14,000 employers participate.
“LGPS members are very aware that steps must be taken to improve the quality of their data and this is an area the funds and the scheme advisory board are actively seeking to improve,” Dabrowski added.
With the recent coming into law of the new GDPR, understanding what data you have and where it is held is imperative, and this figure clearly highlights that many pension schemes have yet to make a start on this business-critical task.
If the startling figures outlined in the regulator’s report are ringing an uncomfortable sounding bell for you then it’s never too late to begin looking at ways to put this right. eShare have been the number 1 board portal solution for pensions providers for more than 10 years, with a proven track record of improving governance within these organisations.
If you would like to know more about our products and receive a free demonstration, please get in touch with us today.