Just 17% of industry experts consider member data quality as a priority in the next one to two years?!? Really? And only 18% are prioritising governance. Are they aware we are a fifth of the way through the 21st century?
In an industry overwhelmed with mistrust we need transparency and governance excellence. We also need to let members know how we are improving, but only 26% see member engagement as a key focus over the next 1-2 years.
Every other industry is working tirelessly to make sure their data is top notch. But perhaps that’s because they have already grasped why it is so important. So they can harvest insights to understand their customers more, and make informed, commercial decisions to better meet their needs through product and communication development. Having good quality data isn’t a cost exercise, it’s an investment. Let’s skip the old cliché about data being at the heart of every scheme and take a look some practical examples:
What about your strategic scheme goals for the next 1, 3, 5 years?
2019 was a record-breaking year for buy-outs and the next decade is forecast to see an exponential boom. If you have a liability management exercise on the agenda – accurate member data can affect a buy-out deal price anywhere between 5-12% – we are talking potentially millions of pounds of savings for some schemes. To ensure you’re always working towards best member outcomes, investing in data quality is a no-brainer.
It may be that you have a GMP project to complete – by now, you’re likely to have a good understanding of the scheme members affected and the level of under and over payments due. And you’ll need your GMP records to be accurate before embarking on GMP equalisation. Where members are affected by both – calculations will need to be based on reconciled values. To carry out GMP equalisation you’re likely to need more detailed data than is typically available for your day-to-day administration. Getting your data ready is an essential step of the process.
If you’re planning to move/change administrator or consolidate your trust based scheme– moving bad data from one system to another is like putting one sticky plaster on another to cover a cut that really needs stitches. Unpicking this in the future will be resource intensive. Getting your data right before transition is crucial.
The rules say you have to…
Late in 2019 the regulator gave 400 schemes notice to complete a compulsory data review because they had failed to do so, and wrote to a further 1200 reminding them of the importance of annual data reviews. Let’s not make bones about it – ‘review’ doesn’t exactly do justice to the requirements from a ‘clearer, quicker, tougher’ regulator. Scheme-specific data checks need to be a fundamental test of whether the data held is fit for the purpose of pensions administration and aligned with the scheme’s benefits and processes. This isn’t a tick box exercise of rolling out generic tests year after year. It is no longer sufficient to just measure the presence and consistency of data. Tests need to measure the accuracy of data. And data scoring needs to expand beyond the main administration system; separate records such as a payroll database or standalone spreadsheets also need to be included.
Failure to comply with a TPR notice carries a fine of up to £5,000 for an individual or up to £50,000 in any other case – can you really afford for data not to be a priority?
The Pension Act 2020 is coming
And so is the pensions dashboard – and along with it compulsion to make your data available. As The Pension Schemes Bill makes its way through parliament we know it’s only a matter of time before it receives royal assent. Data and dashboard go hand in hand – you can’t have one without the other.
What do your customers want?
According to Smarterly’s research – also released this week 65% of employers say the industry is crying out for fresh ideas and innovation that support an ever-changing workforce. And with over half of employers stating they are intending to review their pension provider this year – do you know what your customers want? Have you got useful data insights on your members? Do you know what’s important to them – online access, ESG options, decummulation? Member data is key to innovation.
Guy Opperman wants to revolutionise the pension industry and make the UK the best place in the world to retire… we need innovation and a commitment to change to achieve this, not more of what we’ve always done.
Data, data, data
Data impacts so many elements of pensions – effective governance, day-to-day administration, projections, decision-making, risk management (we could go on). Good data is an enabler, not just for your scheme, but also to best member outcomes – make sure it’s on your agenda for 2020.