From the blog: To say that data quality is poor in both occupational and other forms of pensions is an understatement.
In the world of defined benefits in particular, having the right data has operated on a 'needs must' basis rather than consistent maintenance.
The result? Lengthy delays and an unacceptable lack of preparedness.
In the world of defined benefits in particular, having the right data has operated on a 'needs must' basis rather than consistent maintenance. The result? Lengthy delays and an unacceptable lack of preparedness.
Data improvement shouldn’t be viewed as a cost but an investment that can provide strong returns
The vast majority of delays or miscalculations stem from data issues.
In a scenario where information is digitised, administrators can call on all data and handle enquiries and benefit settlements in a matter of minutes, thus reducing time, complexity and the frictional cost of administration.
But in a world where consumers and members expect online access, how can schemes possibly respond when data has gaps, is out of date, and some is in paper form?
Regulatory pressure
It is several years since the Pensions Regulator introduced a set of basic rules around data standards.
The regulator is now raising the bar again, through new initiatives such as the planned inclusion of data quality in annual scheme returns. Schemes need to make sure they are one step ahead.
Member exercises
Scheme changes or offers such as a pension increase exchange boost member contact, requiring more data on the membership – from addresses and spouses’ details to health information. Full and accurate member data is therefore vital if schemes are to effectively analyse the relevance of, and return from, this type of exercise.
Buy-in or other liability derisking exercises are often driven by sponsors, who can become frustrated that data issues prevent transactions within a window of opportunity.
TPR's record-keeping push welcomed but stresses remain for small schemes
The Pensions Regulator is demanding that trustees report on record-keeping in the scheme return and has issued new guidance, after conducting a survey that found that too many are not measuring members’ data.
When completing such a transaction, the scheme will often pay a data risk premium to the insurer. Without the ability to benchmark this premium, it is likely to be higher than necessary.
Pensions dashboard
Whether welcomed or not, the dashboard will be with us in some form in 2019, and in substantive form by 2021. For the dashboard to achieve its objectives, we need full compliance with data access across the industry, and this means enforcing legislation.
Getting data into a fit state for current and wide-ranging future purposes requires a strategy; ensuring that data is benefiting the scheme, not detracting from it.
With technology on hand, future-proofing your data needn’t take huge amounts of resources or disrupt business as usual while ensuring that short, medium and long-term goals are achieved.
Data improvement shouldn’t be viewed as a cost but an investment that can provide strong returns.
Duncan Howorth is senior vice president at administration consultancy ITM
