E-admin hopes dashed by data quality

When industry group the Pension Administration Standards Association decided to survey its members on attitudes towards technology and the future of member service, it was unsurprised to uncover general enthusiasm among its members.

Half of the respondents to PASA’s survey say they would like to provide accumulation or decumulation modellers to help members plan for their retirement within three years. The same proportion say they would like to use biometrics to identify members within three to five years.

Also prominent on the admin wish list were self-service calculations, automatic benefit statements and payslips, and targeted educational initiatives.

Schemes see improved member experience, reduction in administration costs, and an increase in member engagement as the key results of better technology use.

When it comes to compliance with wider industry modernisation, 60 per cent feel believe they will have dashboard functionality within three years.

Data quality still disappointing

However, the survey reveals that many trustees may be kidding themselves as to how well prepared they are for these improvement works to take place.

For a start, a worrying proportion of schemes are unaware of their common data score – 28 per cent of hybrid plans, 44 per cent of defined benefit schemes, and a staggering 82 per cent of defined contribution arrangements.

That means that even if schemes are able to implement new services leveraging technology, a large number of them will be based on potentially inaccurate data, running the risk that member confidence in their pension provider is undermined.

The report highlights several other key risks associated with poor-quality data, including difficulties tackling guaranteed minimum pensions, delays and added costs to bulk annuity and derisking projects, and reputational risks connected to erroneous calculations.

Just 12 per cent of respondents have reached out to members to ascertain how their service could be improved by technology.

Chris Connelly, chair of PASA’s e-admin working group and propositions and solutions director at Equiniti, says: “We didn’t go into this report expecting to yet again be the latest people being critical of data, but it is an inescapable conclusion.”

Trustees are taking steps to improve data, with more than half of DB schemes and more than 75 per cent of hybrid schemes currently reporting themselves as undertaking data projects.

However, the report also notes that only 20 per cent and 30 per cent of these groups, respectively, rate their data as anything other than good or excellent – signalling an element of confusion or obfuscation among the respondents.

Mr Connelly says trustees “might not think it’s their job to know [their data scores], but how are you making decisions about anything you do?”

Dashboard leaders should enable maximum compliance

The reintroduction of the Pension Schemes Bill means plans can once again be forced to supply data to the pensions dashboard. PASA’s findings suggest compliance may be trickier than originally thought, but Mr Connelly says it should not be beyond schemes’ reach.

“The data that is required for the dashboard is no different to your member asking for a benefit statement,” he says, although he adds that the extent to which regulations require data to be current will be an important factor.

He says policymakers should aim for breadth of coverage rather than depth of information, allowing schemes to be highlighted on the service even if members then have to enquire further to find the value of their pensions.