Speaking to Parliament's Work and Pensions Committee last week, the former pensions minister Baroness Ros Altmann said that poor record keeping by employers could mean that millions of people don't get the pension that they are entitled to when they retire.
Under UK law, employers are required to keep accurate records about their workers' salary, pension contributions as well as other things such as a guaranteed minimum pension (GMP). However, defined benefit schemes, also known as final salary schemes are particularly likely to have problems. Because in these schemes people receive a pension based on their salary and length of service, if these have not been accurately recorded, many people could see them receive pensions that are much less than they are entitled to.
"Significant element of uncertainty in many schemes…"
"Most of the old-style pensions that lots of people in their forties [or] fifties certainly would have won't be in a format that can go immediately online," Altmann told the committee.
"Defined benefit schemes even more so. They haven't got correct records for many of their members on paper, never mind on a system. Records have been lost over the years."
This poor record keeping means that it is virtually impossible for anyone to be certain they are getting the pension they are entitled to.
"To be honest, there is a significant element of uncertainty in many schemes about what the true entitlements are for many of their members," says Altmann.
"Areas of concern"
The Pensions Regulator has long been aware of this issue, two years ago highlighting "areas of concern" and has been working hard to help improve employer record keeping. In a statement to the Financial Times, a spokesperson said:
"From 2018 we will be introducing new requirements for schemes to report on their data in their scheme return. This will enable us to better target our interventions to drive up standards of record-keeping."