The Pensions Administration Standards Association’s board director, Girish Menezes, suggests a seven-step strategy to bring the pensions industry into the 21st century, as members will expect a transition to online par with other financial industries.
It was too difficult to find a large enough sample of trustees and pension managers who knew what pensions technology their administrators used, their data score, or what self-service functionality was available on their member website.
When banks, credit card companies and mobile phone providers expect consumers to log into a website to see their bill, why do pension providers still send paper payslips and benefit statements?
This reflected the survey results published by the Pensions Administration Standards Association in 2019, where almost a quarter of respondents said they did not have a view on their data quality and 27 per cent said that their data quality was average or poor.
My own experience when I win new business is that when a trustee tells me their data quality is good, it is usually average or even poor.
The PASA survey also noted that 50 per cent of respondents still sent out paper payslips, two-thirds did not offer online switches, and 90 per cent do not offer decumulation modellers to help members understand their retirement options.
This is akin to having a bank account with no online banking, monthly statements in the post, and having to call or write for any information due to a lack of an appropriate website.
However, trustees and pension managers do not lack ambition. What is missing is a plan and investment.
If the pensions industry does have the appetite to step forwards into the 21st century, the actions it needs to take are clear. I suggest a seven-step strategy:
Education
At the very least, what every scheme requires is a website with comprehensive education around the pensions process, including information about retirement options, taxation issues and warnings around pension scams.
Larger schemes may want to provide bespoke content, such as newsletters, defined contribution options, or information on the strength of the sponsor covenant.
Retirement income benchmarks and modellers
The Pensions and Lifetime Savings Association’s retirement living standards website is an excellent resource of well-researched facts around the levels of income a pensioner needs and is a great place to start planning.
Alternatives exist, built by insurers, software providers, employee benefits consultants and independent financial advisers.
We need to leverage these resources, coupled with modellers that can pull in a wide range of income and asset data to offer members a realistic view of their financial position.
Online forms
Few administrators offer comprehensive online forms to enable members to access all of their pension arrangements online.
If members can apply for a bank account, credit card or mortgage online, they will expect to be able to apply for a retirement quotation or report a death online as well.
Benefit statements and payslips
When banks, credit card companies and mobile phone providers expect consumers to log into a website to see their bill, why do pension providers still send paper payslips and benefit statements?
Naturally, an individual needs to be able to opt out, but the default really must be online.
Real-time data and calculations
Administrators that lack the ability to offer members access to their data are heading the way of the dodo, and trustees will be coerced into cleaning their data via the regulator’s data quality tests, the guaranteed minimum pensions equalisation requirements, and the pensions dashboards.
These initiatives will ensure that members can first view their data, but then manipulate it via modelling, updating or calculations.
Real-time updates
The next challenge is keeping members informed.
Digital workflow systems can send out automated emails and text messages to ensure that the member is fully informed as their case goes through the process.
Transitioning to email communication will mean that members receive information immediately wherever they are in the world, rather than having to wait until the post arrives.
Global dashboards
Integrated global dashboards will allow members to log into their preferred provider, who will pull together various financial arrangements into a single view.
To change address, request a retirement quote, or report a death in a single location, a range of interconnected systems will kick into gear across the pensions sphere to complete the desired action in optimal efficiency.
This is the future and the pensions industry will be pulled kicking and screaming to this ‘promised land’.
Girish Menezes is a board director at PASA, a member of the Pensions Management Institute’s advisory council, and head of administration at Premier Pensions
