TfL adds online self-service in admin refresh
The Transport for London pension fund is introducing a new administration system that will give members a self-service option, something experts say can help reduce costs in the long term.
Member administration is at the frontline of a pension fund, ensuring members get what they need, but pressure on costs means services tend to become ever more streamlined. When choosing a new software provider, cost was the second most cited criteria, according to a 2016 survey by Capita, after reliability.
You want to get to a stage where all your communications are online
Members of the £9.3bn TfL scheme were told in April that the pensions team had been working on the implementation of a new administration and payroll system for more than 18 months, and members are now able to register for the new self-service portal on the scheme website, a fact that is highlighted in capital letters.
Through the self-service portal, TfL scheme members can see payslips, P60s and benefit statements, and are able to run their own retirement calculations.
The scheme is also asking members to “save money and go green” by having regular communications sent via email.
New systems can trigger spike in demand
Self-service offerings are becoming more standard as the way members engage with their scheme evolves and the market adapts, said Chris Roberts, a trustee representative at Dalriada Trustees.
The majority of administrators have developed online member access, he said, but noted that “not all schemes are transitioning, so TfL are probably still ahead of the game so to speak”.
PPF members can soon 'retire online'
The Pension Protection Fund is also ramping up its member services. "The ability to retire online will be there by end of calendar year," revealed chief customer officer Sara Protheroe, making the PPF one of only a handful of schemes offering online retirement.
"We want them to feel as if they choose us if they could," she said about the reason for improving the services.
The PPF's self-service option also includes a modelling tool, where members can see their entitlements depending on the age at which they choose to retire.
Take-up is currently low however, with just 10 per cent of the membership having registered.
A system like this should over the long term reduce the enquiries made of the administrator, which could lead to savings, after an allowance for a short-term spike in demand as members get used to the new site.
However, if using an external administration company, “to access this saving, the trustee must understand their contract and ensure that they are receiving the upside”, he noted.
“The majority of contracts with administrators… charge based on an expectation of requests, with a likely capped threshold above which requests would be charged. These contracts don’t rebate in quiet years,” he pointed out. Therefore, “if the norm reduces, the trustee should look to develop the contract”.
Tracy Weller, third-party administration practice leader at consultancy Hymans Robertson, agreed that a self-service facility can reduce costs over the longer term.
“Quite often members will contact you for speculative quotes… and that’s a significant amount of work for an administrator to do,” she said.
If with the online tool members can model how much they will receive if they retire at different ages, it saves the administrator valuable time.
Take-up rates are a challenge
The key with online member communications is “giving them something to come back for”, argued Weller.
Babcock takes member comms online to boost efficiency
The Babcock International Group Pension Scheme is moving its communications online in an attempt to cut costs, boost efficiency and better reflect the preferences of members.
“In the past, DB pensions was a bit boring online, because all [members] could do was go in and see their record. But now if they’re able to do calculations… that gives a member a reason to go back to get those numbers,” she said.
Nonetheless, engagement with online self-service options remains low.
“The best I’ve seen is about 20 per cent of the membership logging on - and they don’t necessarily repeat the action.”
Paul Latimer, partner and head of pension administration at Barnett Waddingham, agreed take-up rates can be a challenge, but said administrators still aim to move as many people as possible to online, “certainly to run retirement quotes”.
Trustees have a crucial role to play in this, he said: "The admin firm can do so much, but to really get engagement it’s the trustees themselves that have to go out and sell it."
Creating online self-service is only the first step for Latimer, however. “Where it moves on to is you want to get to a stage where all your communications are online. You want to save on postage… it’s what everybody’s aiming for.”