I prefer to think of BtoB as an exhortation not to overlook the basic essentials. Those Olympians who run off with the gold medals would not have got to the Games, let alone the winner’s podium, unless day after day they had slugged away practising the basics of their game. My firm is sponsoring, for the 2012 Olympics, 14-year-old Laura Robson – this year’s English Wimbledon sensation. She knows that, without all that work on the basics and for all her talents, she would never have got into junior Wimbledon, let alone walked off with the winner’s medal.
The regulator
The Pensions Regulator has gone BtoB in its new consultation paper on record-keeping. Some have, rather disdainfully, dismissed this as obvious. Such comments are unfair. Everyone should read the consultation document – not just administrators – especially those (myself included) who can get carried away debating the pros and cons of the proposed extension to the regulator’s moral hazard powers.
The regulator finds there is evidence of some real problems with record-keeping. The problems are, unsurprisingly, greatest with legacy data. It notes of defined contribution schemes that the complexity, volume and speed of processing are of a higher order than defined benefit – with associated risks that can be expensive to correct. It notes failure to maintain good records only defers cost. It does not eliminate it. Records will have to be cleansed at some time. But effective data cleansing may not be possible at some future date, when employers’ records may have disappeared. One leading buyout provider told the regulator up to 30% of the member records they see contain errors – such that scheme liabilities may have been underestimated by as much as 5%. The regulator notes members will not receive correct benefits if records are incorrect. And what is the pensions business all about, if not delivering to members, when they retire, the benefits to which they are entitled?
John Major was big on “respect for the law” in his view of BtoB. The regulator’s consultation document lists six different parliament-made laws, one EU directive and one judge-made common law requirement, mandating trustees to hold accurate, up-to-date information about all scheme members. Bad record-keeping is not only an affront to members, it is also very disrespectful of a lot of laws.
