Increased self-service will boost data quality and raise admin standards

Schemes have a duty to provide the right benefits to the right person at the right time. It is a simple equation, but schemes are often hampered by poor-quality data.

They may have worked around it in the past, but the Pensions Regulator is watching this closely, so there is good reason to get one’s data into order.

The importance of good – and in particular complete – data is essential for modern day administration.

Increased self-service will in turn improve data quality, raise standards of administration, save the scheme money and improve overall levels of governance

Members increasingly have an expectation of the ability to self-serve and have real time access to their benefits information. This is almost universally available for defined contribution members but not so for those who have defined benefits, the main reason being the completeness of legacy data.

Self-service is not about reducing costs by having members do all the admin; it should be mutually beneficial, because it makes it easier for members to get what they want, when they want it.

It also enables employers and trustees to engage more regularly with members, and frees up administrators to focus on adding value and helping those members who really need assistance.

Poor data undermines automation

A very good example of this is the increasing use of online quotation systems that offer a retirement quote or a transfer value at the click of a button.

This service is utterly reliant upon the complete data being held on the administration platform. Any gaps or errors will remove the quote from the system into the offline workflow which could take five to 10 days to be processed.

Incomplete data prevents any calculation from being fully automated. The consequence of completing that task is then the time – and therefore cost – spent looking for that information.

Future-proof your scheme

Complete data offer more than simply satisfying a member’s whim about their benefits at five different retirement dates.

It future-proofs the scheme against costly errors, or inefficient waste from having staff making unnecessary manual interventions. Managing data is therefore not only about managing cost for the sponsoring employer and administrator, but also improving governance – and that is a worthy objective in its own right.

For example, guaranteed minimum pension reconciliations remain an ongoing issue for many schemes, despite HM Revenue & Customs making it clear that it will be withdrawing support in the near future.

Those who have already completed this project can be sure that members’ benefits are tranched correctly and will be in a good place to manage a future GMP equalisation exercise (in the wake of the recent Lloyds Banking Group ruling).

But again, only getting on top of data to satisfy a regulatory requirement means schemes are missing a trick.

Those cost savings can mean that administrators who are released from the inefficient fact-checking and correction treadmill can be redeployed at adding value to the scheme, and ultimately the members.

Data cleansing is an expensive and involved process, which is why it is often left until a scheme is approaching a derisking exercise, which can then delay taking advantage of market conditions when a trigger is met.

Self-service gives members what they want

Although your scheme may be a million miles away from having an online quotation service, there will be things you can do to improve data quality.

Self-service is not an abdication of responsibility, but will give members what they want – access to their pensions data when they want it.

GMP reconciliation will have done some of the work, but there may be other gaps that a conversation with your administrator will highlight.

Ask what checks have been performed on your scheme’s data any time in the recent past.

Consider what they were, how extensive they were and whether they have highlighted anything notable. If there have not been any, there are checklists available to help you get started.

Increased self-service will in turn improve data quality, raise standards of administration, save the scheme money and improve overall levels of governance.

Ultimately, the quality of your data has an impact on your ongoing costs and risk management, whether it is for ongoing administration, derisking or even transitioning to a new provider.

In fact, it is hard to see any downside in cleaning up your scheme’s data.

Heather Quelch is head of pensions administration at TPT Retirement Solutions