With ALM gizmos, are we seeing the gamification of pensions data?

The idea has spread like wildfire through the business world, with even former US vice president and presidential candidate Al Gore proclaiming: “Games are the new normal.”

[Trustees] need to make sure they have the right consultants in place to advise them on the figures they are looking at

Monica Cope, Veratta

This trend has even sent ripples into the pensions industry. Recently, there has been a raft of investment consultants launching online monitoring tools for pension schemes.

Trustees can, with the touch of a button, see the impact of decisions or changes in economic scenarios in an instant, with colourful graphs and dashboards informing scenario planning.  

But is putting real-time information in the hands of trustees and employers helping or hindering trustee meetings? The response from trustees has been mixed.

Richard Butcher, managing director at independent trustee company PTL, recommended at a Pensions Expert roundtable discussion earlier this year that his peers should be careful with analytics tools.  

“You will get trustees who play with it, and if they do not know what they are playing with, it is no better than playing a video game,” he said.

Giles Payne, director at professional trustee company HR Trustees, said these applications are useful to an extent because they can point trustees in a direction of travel.

“But people get too hung up on the minutiae because so much of it is assumption-dependent and therefore if you take it too much as the whole truth and nothing but the truth, you're missing the point slightly,” he said.

Payne said he uses it as a "point of discussion" rather than to inform an immediate decision, but cautioned against using the models without a consultant present to advise on what the data mean.  

Monica Cope, chief operating officer at Veratta, a data management and software provider for pensions, said one of the main upsides of these tools is the ability to give timely asset information and projections to trustees.

However, one of the downsides is that trustees may try to advise themselves without an actuary present. “[Trustees] need to make sure they have the right consultants in place to advise them on the figures they are looking at,” she said.

Steve Delo, chief executive at Pan Trustees, said such models can be useful but can also be dangerous. “There are advantages to trustees having a little bit more real-time or near to real-time information so they can look at the sensitivities of certain things,” he said.

“But it needs to be done in a structured way with an objective, because you can end up fiddling around with these models and wasting a lot of time.”

There is a lot of competition in the market, with consultants trying to differentiate themselves with the effectiveness of the models, Delo said.

“If it is enabling you to link up the key things that trustees need to link up better – funding levels, investment strategy, opportunities to buy out and buy in, and opportunities for other derisking mechanisms – then I think you are achieving something,” he said.

But if the model only provides a "shop window" for existing information the trustee already knows, then it is not doing very much, Delo added.