Defined benefit (DB) pension scheme trustees should be prioritising work to get their data buyout ready, Hymans Robertson has said, warning that data quality has become a key factor for schemes approaching the buyout market.

The firm pointed out that, given record demand, insurers are increasingly now in a position of strength and able to select the schemes which are attractive to them, and are likely to set stringent conditions around the basis and timescales on which they will provide quotations.

Given this, it argued that trustees need urgently to meet the challenge of data readiness as a scheme nears buyout.

Commenting on the data readiness challenge, Hymans Robertson client manager, third party administration, Colin Wheeler, said: “Administration has never felt as important as it does now, particularly the need for quality data.

“Many trustees and sponsors want to take advantage of the opportunity to fully or partly insure their benefits, so it really is a race against time to get data sorted.

“Although many schemes now have a real focus on getting their data ‘buyout ready’, a challenge is simultaneously dealing with GMP equalisation and pension dashboards, while the DB market is already facing skills gaps and shortages in its resourcing. But the demands have been made, and administrators need to meet them."

Wheeler acknowledged, however, that some difficult discussions will be needed between trustees and their administrator, warning that failing to do so may compromise a scheme’s chances of getting to market and positioning themselves as attractive to insurers.

"Where insurers are only prepared to quote in a fixed window or with specific conditions there is little room for negotiation," he continued.

“All insurers, for example, will require a legally signed-off benefit specification and this will need someone with intimate knowledge of the scheme to review it against administration practices.

"Also, many of the data issues needing attention are legacy problems stretching back to the 80’s and 90’s, matters like franking and equalisation windows. Many of the people working on the data were not even born then, and many with this knowledge have now retired or left the industry."

Given this, and the finite amount of resources available, Wheeler argued that trustees must be willing to compromise on some of the day-to-day work, or scheme events, to allow priority to be given to data work.

He added: "Clearly, there are tasks with statutory deadlines, or member events such as retirements and deaths which must be dealt with, but there are many more activities that could be delayed or postponed allowing the data work to progress.

"With many of these schemes facing pressure from sponsors to “de-risk”, trustees need to be willing to accept this reality and rise to the challenge?”

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