HOW WILL THE DEPARTMENT ENSURE THAT
THE CHANGES RECEIVE ADEQUATE PUBLICITY?
23. In our earlier report we concluded that for the
Inherited SERPS Scheme to be successful, the 20 million SERPS
contributors would need to know about it, fully understand the
issues involved, and have simple claim forms. In reaching this
view we noted that work by the Financial Services Authority showed
that only a very small percentage of the public actually understood
even the basics of pensions. We were also very concerned that
the Department's records were so flawed that they could not communicate
with people who had contributed to SERPS. People were not obliged
to notify the Department of changes of address, and the Department
estimated that one third of the details they had were incorrect.[23]
24. We believed that, before ruling out writing to
everyone eligible, the Department should obtain better information
on the proportion of people affected and to whose attention the
issue would be properly drawn and the costs, if :
- letters were sent to all addresses held on record
by the Department;
- an advertising campaign was launched; or
- both options were pursued.[24]
The Department promised to carry out research on
the best way of reaching people, including these options.[25]
25. In announcing the new proposals the Secretary
of State proposed to:
- write to all those people who had already been
in touch with the Department to inform them about the changes;
- give widespread publicity about the changes to
all those who could be affected;
- use the annual pension statements due from the
end of 2001 to give people more information about their pensions
and set out individuals' pension forecasts.[26]
26. The draft regulations provided to us do not comment
on the results of the Department's research or provide details
about the methods the Department intend to use to publicise the
changes to SERPS inheritance or the availability of compensation.
Conclusions
27. The publicity requirements for the new proposals
differ in some respects from those we identified for the earlier
scheme because of the automatic protection now afforded to those
who will have reached state pension age by October 2002. The main
groups who now need to be reached are those who are not fully
protected by the new proposals and who may be eligible for compensation,
and those of working age who are unaware of the changes.
28. We welcome the steps already taken and the measures
proposed to give people better information in future. The new
rules are likely to have a profound effect on many people's future
financial security and it is therefore essential that all those
affected are informed quickly so that they may make alternative
plans. We remain concerned whether the measures proposed will
be sufficient to achieve this. We expect the Department's detailed
plans to take full account of the results of their earlier research
on the likely success and costs of writing to all those affected.
The Department should also consider seeking the help of voluntary
agencies, Inland Revenue and/or employers in distributing information
about the new arrangements.
29. The Department are doubtful about their capacity
to keep up to date records of addresses for SERPS contributors.
However, it appears to us that the success of using annual pensions
statements to give people more information about their pensions
is likely to depend on achieving significant improvements in the
accuracy of their records. We recommend that the Department take
positive action to assess what measures are needed to enable them
to communicate information reliably and effectively to SERPS contributors.
MANAGING THE RISKS OF IMPLEMENTATION
30. We recognised in our earlier report that the
Department were developing an overall risk management strategy
as a response to the inadequate attention given to identifying
and managing the risks involved in the change in arrangements
for inherited SERPS. We looked to the Department to ensure that
in designing a workable scheme the risks involved in the Inherited
SERPS Scheme could be managed.[27]
31. As outlined above,[28]
the new proposals bring particular risks in managing the compensation
arrangements and in ensuring that the new arrangements are adequately
publicised. In addition, NIRS2, the Inland Revenue's National
Insurance Recording System, plays a key part in the administration
of pensions and successful management of system changes will be
essential in implementing the new proposals. The system will need
to be updated so that it can correctly calculate individuals'
SERPS entitlements, including the different rates of inheritance
that apply under the transitional arrangements. The system will
also need to be capable of issuing each year the individual pension
statements that form an important part of the Department's publicity
for the changes.[29]
32. We have examined on several occasions previously
the problems experienced in implementing the new National Insurance
Recording System. In our report in June 1999, for example, we
expressed particular concern about delays to the implementation
of NIRS2, about the impact of these delays on the citizen, and
about the time and resources it would take to clear backlogs of
work.[30]
In our report in August 2000 on the National Insurance Fund we
recognised the considerable progress in implementing NIRS2, but
were concerned that the system would not reach 'steady state'
until April 2001.[31]
Conclusions
33. In implementing the new proposals the Department
will need to manage the risks involved carefully and should pay
close attention to the recently published National Audit Office
Report on Supporting Innovation: Risk Management in Government
Departments.[32]
That report recommends that Departments should have in place a
corporate and systematic process for evaluating and addressing
the impact of risks in a cost effective way and have staff with
the appropriate skills to identify and assess the potential for
risks to arise. The Report set out six essential requirements
that need to be in place if risk management is to be effective:
- risk management policies and management should
be clearly communicated to all staff;
- senior management need to support and promote
risk management;
- the department's culture should support well
thought through risk taking and innovation;
- risk management should be embedded in management
processes;
- the management of risk should be closely linked
to the achievement of objectives;
- risks associated with working with other organisations
should be assessed and managed.[33]
34. Successful implementation of the new proposals
will depend in part on changes to NIRS2 system procedures and
software. Given the long history of problems with NIRS2, we consider
it essential that the Department works closely with the Inland
Revenue and Accenture to ensure that all necessary changes are
successfully delivered in good time before the new proposals come
into effect in October 2002.
1 It is understood that these draft Regulations are
intended to be laid before Parliament on or about 26 February
2001 Back
2 34th
Report of the Committee of Public Accounts (HC 401 (1999-2000)),
paras 1, 5 Back
3 ibid,
paras 2, 5 Back
4 House
of Commons Official Report, 29 Nov 2000, Cols 966-967 Back
5 34th
Report of the Committee of Public Accounts (HC 401 (1999-2000)) Back
6 C&AG's
Report (HC 864 (1999-2000)) Back
7 34th
Report of the Committee of Public Accounts (HC 401 (1999-2000)),
para 1 Back
8 ibid,
para 2 Back
9 House
Of Commons Official Report, 29 Nov 2000, Col 966 Back
10 Appendix
1, page xv Back
11 34th
Report of the Committee of Public Accounts (HC 401 (1999-2000)),
paras 52, 59 Back
12 Appendix
1, page xv Back
13 34th
Report of the Committee of Public Accounts (HC 401 (1999-2000)),
paras 53-54, 58 Back
14 House
of Commons Official Report, 29 Nov 2000, Col 966 Back
15 Letter
from the Secretary of State for Social Security to Members of
Parliament, 29 Nov 2000 (not reported) Back
16 House
of Commons Official Report, 29 Nov 2000, Col 967 Back
17 Appendix
2, page xvii Back
18 Appendix
1, page xv Back
19 34th
Report of the Committee of Public Accounts (HC 401 (1999-2000)),
Figure 1 and para 52 Back
20 Appendix
1, page xv Back
21 34th
Report of the Committee of Public Accounts (HC 401 (1999-2000)),
Figure 1 Back
22 Cm
4901 Treasury Minute on 34th Report of Session 1999-2000,
para 7 Back
23 34th
Report of the Committee of Public Accounts (HC 401 (1999-2000)),
paras 48-49, 55-56 Back
24 34th
Report of the Committee of Public Accounts (HC 401 (1999-2000)),
para 57 Back
25 Cm
4901 Treasury Minute on 34th Report of Session 1999-2000,
para 12 Back
26 House
of Commons Official Report, 29 Nov 2000, Col 967 and Appendix
2, page xvii Back
27 34th
Report of the Committee of Public Accounts (HC 401 (1999-2000)),
para 30 Back
28 Evidence,
paras 18, 28-29 Back
29 C&AG's
Report (HC 320 (1999-2000)), paras 1.30-1.32 Back
30 22nd
Report of the Committee of Public Accounts (HC 182 (1998-1999)),
paras 8-9 Back
31 31st
Report of the Committee of Public Accounts (HC 350 (1999-2000)),
para 24 Back
32 C&AG's
Report (HC 864 (1999-2000)) Back
33 ibid,
paras 12, 1.2, 3.2 Back