The Pensions Board has completed its 2011 series of on-site inspections of Registered Administrators (RAs) and has now published a report of its findings on its website together with some general recommendations to RAs to improve their administrative functions.
The trustees of every pension scheme must appoint an RA to provide “core administration functions” to the scheme. The core administration functions are the preparation of annual reports and annual benefit statements for the trustees, and the maintenance of sufficient and accurate records of members and their entitlements to discharge these functions.
RAs are required to register with the Pensions Board on an annual basis and, as part of this registration process, are required to self-certify their competence and capability to perform the core functions and that they have adequate administrative systems and procedures in place.
The Board carries out on-site inspections of RAs to assess whether they are indeed complying with their legislative obligations and have the competence and capability to discharge the core administration functions of pension schemes. The Board carried out 12 such inspections in 2011.
The report on the Board’s findings states that there has been a considerable improvement in administration standards in recent years. While acknowledging that it is satisfied with the level of compliance with the legislation by the RAs inspected, the Board notes a number of issues which came to light during the inspection process. For example, the report notes that there were:
- Instances where RAs had not prepared full member benefit statements as required by law and also instances where RAs were preparing alternative annual reports even though they did not meet the specified criteria to do so
- Instances of non-compliance with the Disclosure Regulations with regard to the preparation and issuing of documentation, for example, where documents (such as member benefit statements and annual reports) did not contain all of the prescribed information
- Instances of inadequate evidence of controls and documented procedures in relation to the ongoing maintenance of core function records
- References to out-dated legislation in their disclosure material (albeit that the information disclosed was largely in compliance with current legislation)
In the report, the Board said that RAs will be subject to ongoing scrutiny and any future instances of non-compliance may result in sanctions being imposed.
The report notes that in 2012 the Board will be carrying out (i) inspections on a number of the RAs who were requested to provide the Board with certain information in relation to their administrative systems and procedures earlier this year; and (ii) “call-back inspections” on some RAs who were inspected during 2010 and 2011 as a means of assessing the progress being made since their last inspection.
It is important for RAs to be fully aware of and to comply with their obligations under the Disclosure Regulations. While the Board is satisfied with the level of compliance from RAs and acknowledges their commitment to continued improvement, it warns that repeated instances of non-compliance may result in sanctions being imposed under the Pensions Act. It is also noteworthy that going forward the Board intends to more actively exercise its power to carry out investigations.