Data has become one of the most pressing issues in the pensions industry, delegates at the Pensions UK Annual Conference heard this week.
Speakers at the event in Manchester said data quality was once seen as an administrative afterthought but is now a strategic priority fundamental to every aspect of scheme management, from member engagement to risk transfer and regulatory compliance.
Matthew Cooper, senior pension risk transfer team member at PwC, said these and other issues – such as guaranteed minimum pension equalisation and the McCloud remedy in the public sector – were forcing schemes to look at the quality of their data.
He said that, despite growing awareness, many pension schemes continue to grapple with poor or inconsistent data that undermines decision-making and increases cost and risk.
He said: “We’re going to have a big debate in our industry about surpluses and paying surpluses, whether that’s using it for members or paying back to sponsors.
“How can we be comfortable [making decisions] if we don’t understand our liabilities in terms of the accuracy and benefits, or the quality of data?”
Addressing the industry’s ‘data debt’
Lucy Stone, business pensions dashboards lead at the Pensions Regulator, told delegates that historical underinvestment in data management meant pension schemes had inherited decades of inconsistent record-keeping and fragmented systems, leading to what she called “data debt”.
Common data –including names, dates of birth, national insurance numbers, and scheme-specific data such as benefit details, service histories, and retirement ages – is often measured only for reporting purposes, rather than to genuinely understand the reliability of member records, added Stone.
“Not only will better data reduce admin costs, but it’s a really positive step towards better financial engagement and [addressing] the adequacy crisis.”
Kristy Cotton, PwC
She said administrators should be flagging risks and issues whenever they arise, not just in annual reports. She added that schemes needed to be ready to demonstrate how they maintain data in line with legal requirements, as they will be held to account if they do not.
However, Stone highlighted that around 70% of schemes now assess data at least every three years. Larger schemes tend to perform better on data management and accuracy, although they still face inconsistencies in how data is tested and scored.
Kristy Cotton, head of pensions data at PwC, said that, as schemes explore new technologies such as artificial intelligence and automation, the quality of underlying data would become even more critical.
She said better data would help schemes across the board and had the power to transform the industry.
“Defined contribution schemes can start to use that data to tailor how they’re speaking to their members and engaging with them,” Cotton said. “Not only will it reduce admin costs, but obviously it’s a really positive step towards better financial engagement and [addressing] the adequacy crisis that the pensions industry is facing.”
