Barnet Council has been told to fix problems with its pension scheme by the end of August or face a fine of up to £50,000.

The Pensions Regulator has called for improvements in three key areas after finding the council was failing to comply with pensions legislation.

It comes after data quality problems were spotted in the pension scheme – one of several services run by outsourcing firm Capita – which were described as “very serious” by finance committee chairman Cllr Peter Zinkin at a meeting in March.

In an improvement notice sent to the council in June, the regulator told the local authority to monitor contributions paid by employers on a monthly basis and show it had carried out checks on End of Year Certificates.

The council needs to show it is making progress on an action plan to clean up data errors affecting the scheme.

It must also demonstrate it has “taken all steps necessary to implement and operate adequate internal controls to provide accurate annual benefit statements for financial year 2018-19”.

The maximum penalty for failing to comply with the regulator’s orders by the August 31 deadline is a civil fine of up to £50,000.

Earlier this year, a report by consultants Hymans Robertson revealed that as of December last year there were more than 6,000 “critical” data errors in the council’s pension scheme, including out-of-date salary information and wrong contribution rates.

These errors could affect the amount of pension benefits due to employees of the local authority.

Capita has been working to improve the data and has now reduced the number of critical errors to less than 100.

Council leader Cllr Dan Thomas said: “We welcome this improvement notice and we’re happy to work with the provider to deliver the required improvements.

“At the same time, we’re leaving nothing to chance. That is why we are also putting in place contingency plans to plan to find an alternative pension fund provider, if these improvements are not made in the time required. We are determined to get things right.”

“Council officers will appoint an alternative provider, should the necessary improvements not be made in respect of the pensions fund.”

Barnet Council has been subject to regulatory action over pensions in the past.

In 2017, it was fined £1,000 for missing the previous year’s statutory deadline for sending out pension statements.

The following year, the council reported itself to the Pensions Regulator after failing to produce 447 pension benefit statements on time.

The regulator’s latest intervention will be discussed by the council’s pension board at its next meeting at 7pm on Thursday (July 18), at Hendon Town Hall.