This could easily become a long list, but perhaps the first thing we need, is some focus.

Working for a third-party administrator, I am often asked what the goal of our firm is.

To steal words from someone wiser than me, the answer is simple ‘to pay the right benefits, to the right people at the right time.’

The solution also appears simple; you need to know what the benefits are, who they are owed to and when and this is where simplicity ends, there are so many moving parts in a pension scheme, to mention just two:

·       Updated legislation (either directly or indirectly) often leads to changes in benefit structure – which dictates how benefits are calculated

·       Members not engaging with their pension scheme allows key contact information to become out of date

Back to my original question and sticking with simplicity, I would argue there could be a single word on the agenda for Trustees and Pension Managers: Data. Or better still, two words; Good Data

A good starting point is to consider working in this order:

1.     Sort out your data

2.     Use technology. Not only to reduce costs, but to improve outcomes for your scheme and its members

3.     Introduce consistency to other projects. This creates more certainty over funding requirements and reduced insurance risks

So, why all the focus on data?

There’s no getting away from the fact that, pretty much without exception, any task a trustee or sponsor wants to undertake in relation to a pension scheme will involve at least some reliance on data – specifically member data. This can be from the mundane, like contribution cycles in DC schemes and providing retirement quotations to DB members, to the more exciting like longevity swaps or PIE exercises.

Data has been a focus for PASA for some time and features heavily in the guidance being published by our working groups – from GMP Reconciliation and Pensions Dashboard to Trustee Governance and Transfers. It is also a focus for others in the industry, notably The Pensions Regulator (TPR) - which now requires schemes to report their data scores, both common and key scheme specific, in scheme returns going forward.

Further to that, TPR recognises in the work it’s done in relation 21^st Century Trusteeship that trustees need to engage, oversee and be interested in administration. And, if their administration provider – either third party or in-house – is interested in data, trustees need to be, too. This should hopefully engender a collaborative working environment.

And last, but not least, spare a thought for the Pensions Dashboard (or should that be dashboards?) due to be with us next year. TPR’s focus on data has spread to a desire for members to be able to access information about all their pension benefits in one place - a very noble idea, but one that places a strain on the pensions industry. Can we get together and agree the right format and media for sharing and publishing information? I think the answer is “yes” but before we start doing that, we need to make sure the data is present and correct, lest we cause more confusion for members by giving them false information.

How can technology help?

Data underpins the technology which is needed to ensure tasks can be undertaken with appropriate speed, whilst handling sufficient volume and, perhaps most importantly in the smartphone age, member self-service. Increasingly, it’s not just millennials who want everything now, without even having to interact with a person.

Technology needs to be embraced and, just like data, there are two kinds – the good and the bad. The only technology trustees and pension managers should be interested in is effective technology, which has to be outcome focused and based on good data.

Good data enables administrators, on behalf of trustees, to

·       Act with speed – providing service within agreed levels

·       Discharge their duties with accuracy – enabling provision of relevant and useful management information for decision making

·       Provide good member outcomes – what better outcome than having happy members who are receiving what they are due?

Data is provided at various points throughout schemes’ lifecycles;

·       When a member joins

·       Through regular changes (such as a scheme renewal process)

·       Through ad hoc changes (like someone moving house)

·       Following a transaction or benefit event (like investment of contributions or a retirement)

All this feeds into a central repository – presumably a fit-for-purpose administration system. This system needs to be able to both store and update data, preferably retaining for future reference and not wiping obsolete data, as well as being able to export it to other places in an accessible format.

In order to keep good data once they have it, trustees, administrators and sponsors need to work together to agree information sharing protocols, including media and timing. Further to that they need to regularly review data and ensure they have a strategy for engaging members in order to keep it in good order.

All of which leads us right back to member self-service; can an employer, with the help of the scheme they’re providing, give members access to their online records directly from their desk or work laptop? Or can they facilitate an administration system talking to their own HR system to identify changes made to key data? Removing the need to remember login details for their pension scheme record is one fewer hurdle to be cleared in ensuring data accuracy.

At the risk of being flippant, good data will pay for itself.

Whatever your scheme, the real driver on how much administration will cost comes down to whether the data is any good. And whether something is expensive or not depends on what it delivers against expectations and how it impacts on other scheme costs and projects.

Efficiencies – good data should enable the use of efficient technology, reducing manual input and time spent and therefore introducing cost savings. Why pay your administrator to update a member’s address or calculate retirement benefits when they can do it themselves?

Certainty – if you have the right data, you know what benefits you need to pay and when so an accurate value can be placed on them. This feeds through to funding stability and contribution requirements and should remove risk in an insurance context, e.g. no additional premiums on buy-in or buy-out.

Communication and engagement – if you know who is in your scheme you can introduce targeted communications, which should increase engagement and therefore more focused spending in this area.

Have I convinced you? Will your agenda for next year be very short and extremely focused? Hopefully the answer is yes, and your agenda can focus on other areas in the years to come, safe in the knowledge your foundations are solid.

Chris Tagg, PASA Director, Partner, Barnett Waddingham LLP