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The Actuary The magazine of the Institute & Faculty of Actuaries

Solvency II model could raise pensions admin standards

Speaking at the Professional Pensions Show, Mr Titley told delegates they could learn a lot from the insurance industry and its implementation of Solvency II requirements.

He noted that the European Parliament had already indicated that this approach would be the best way to extend its occupational pensions directive.

He highlighted the second of the three pillars of the regulation - data quality - as an area with "striking synergies" with the aims of the pensions industry.

This pillar sets out four criteria for data: it must be appropriate for all purposes, complete, accurate and timely, and the administrator must be able to justify the way in which they use data.

Titley highlighted the first point, saying: "It's not good enough if your data is only appropriate for calculating benefit statements and pension increases, you need to have relevant data to price buy-outs, make actuarial calculations etc."

He advised trustees to consider adopting written data management policies which is part of the regulatory disclosure requirements of Solvency II.

This document requires insurance companies to disclose what data they hold, the organisational ownership of the data, define data quality requirements and controls over external data sources, document quality measures and audit processes, and provide an improvement plan.

"This kind of document could be a really useful governance tool for schemes going forward and could be a very effective voluntary disclosure measure," he said.

Source: Professional Pensions