Zurich has been described as ‘crass’ and ‘out of touch’ for asking pension trustees and managers to collect data on the nationality status of scheme members.
The provider has created a new ‘nationality declaration form’ for occupational plans that asks trustees and administrators ‘how and when you will provide member nationality information’.
Pension consultants have attacked the request as intrusive, out of touch, culturally-insensitive and potentially in breach of data protection legislation. Consultants have pointed out that there is no legal requirement for pension schemes to see proof of nationality.
They add that the cost of running such an exercise, which would involve seeing certified photocopies of passports or visas, could be around £100 per member.
Experts have also questioned how enemies of the state use pension scheme cash to fund illegal activities.
Zurich says the request has been made to assist it comply with anti-terrorism legislation, HM Treasurys Sanction regime, Foreign Account Tax Compliance Act (FATCA) and the Joint Money Laundering Steering Group (JMLSG) Guidance. But the provider has apologised for the way the request has been perceived and has confirmed that it does not actually need the data requested in the form.
Consultants have pointed out that pension schemes are exempt from FATCA, and have argued that such an exercise could create unnecessary distress for members at a time when certain ethnic groups are feeling under pressure from anti-immigrant in the UK, a view likely to be shared by trade union representatives on trustee boards.
LCP partner Andy Cheseldine says: “I’m surprised that they are asking for this information as, from an anti-money laundering perspective, pensions are deemed low risk – by HMG’s Joint Money Laundering Steering Group – and there is no requirement for this data to be held. Equally, although employers are required to check that new employees have the right to work in the UK, I don’t know of any trustees that maintain those records on a central database. The key reason for this is they have no reason to do so and the Data Protection Commissioner tends to be unhappy about anyone keeping redundant personal data.
“I would therefore be surprised if any trustees are able, or willing, to pass over this kind of personal information.”
Aon Hewitt principal consultant Kevin Wesbroom says: “My first reaction was that I assumed it was a cleverly-produced spoof as I could not believe anyone would be so crass as to ask for and collect such information -particularly in light of today’s heightened conditions. Surely doing so has data protection issues written all over it.
“I struggle to see how they are going to use the information. The thought that they would use it leaves me more suspicious than less.”
Zurich pensions management director Dave Lowe says:“I’d like to apologise for this misunderstanding. We do not require this information, although if people have it to hand it helps us to receive it as it is helpful and relevant data for us in order to comply with financial regulation around money laundering and identifying individuals who are subject to financial sanctions. The last thing I want is for people to think they need to spend time and effort getting this information if they don’t have it easily to hand, because they don’t.
“There is a box on the form for people who do not have this information and if they tick that, that’s fine.
“We as a business do not require proof of nationality. We ask whether people have it, but if they do not, that is not a problem. In fact were we to make it a requirement we could fall foul of auto-enrolment regulations by putting in place obstacles to individuals joining schemes.
“The reasons we ask for it are for money laundering and it makes our life easier if we have it. Knowing there is a person from a UN sanctioned state such as North Korea in a scheme would be helpful.”