Lothian adds benefit extension as it looks to upgrade online services

Online benefit calculators are common among defined contribution schemes, but less so among defined benefit schemes due to the general lack of variability in an individual’s benefits.

“We increased the use of the online service by offering members the option to carry out retirement and voluntary redundancy quotes online,” said the scheme in its most recent accounts.

The scheme first introduced a system allowing members to get retirement quotes in 2011. This was expanded to include voluntary redundancy calculations in 2014. The scheme is now looking to expand the services offered and upgrade the system’s usability.

A spokesperson for Lothian said it planned to allow members to update their nomination of wishes for death grants, changes to bank account details and printable P60s, but did not give any timescales for when these changes would be implemented.

More than 12,000 of the scheme’s almost 71,000 members are signed up to use the service. Daniel Taylor, head of administration services at consultancy Premier, said online tools were more common among DC schemes.

“Most have some kind of tool – somewhere around 80 per cent of the market," he said. "Looking at DB schemes the saturation of these services is much lower.”

Ensuring data accuracy

Lothian also introduced a secure data transfer system for employers aimed at improving efficiency while minimising the risk of manual errors. A quarter of the scheme’s employers use the system. It will be rolled out to the remaining employers during 2014-15.

Scottish local government schemes next year face reforms comparable to those in England and Wales, with benefits beginning to be calculated on a career average basis rather than final salary.

The scheme spokesperson said the main objective of the portal was to improve both the timeliness and accuracy of member record information.

“The portal provides a validation function, whereby various data quality checks are performed at the point of submission,” the spokesperson added.

Taylor said that software could be an effective way of minimising human error that can occur between systems.

“The exchange of data has always been a bit of an issue,” said Taylor. “At every part of the manual process there is the chance of problems. There’s very little cross-checking on manual systems.”

The scheme has merged its pension administration system with its payroll system in an attempt to simplify data and reduce risk, ultimately increasing efficiency.

Philip Hollingdale, chief executive of benefits software company Staffcare, said integrating systems has been the reserve of large schemes in the past, but is becoming increasingly accessible for schemes of all sizes.

"In the past it was very bespoke and costly," said Hollingdale. "But as we do more we've prepackaged a lot of this integration work... there'll be more and more demand as more stuff goes online."

He added some employers were beginning to look at integrating data from employees personal bank accounts to provide individuals with a more holistic picture.