It always feels very strange and cold to talk about mortality, as though the people and their lives boil down to a stat. An even stranger term is ‘excess’ deaths – as though there is an acceptable level of deaths and we’ve gone over it. But the fact is, we have. According to the Institute and Faculty of Actuaries, the Continuous Mortality Investigation (CMI) notes there have been almost 110,000 excess deaths over the past year in the UK.
Couple this with the widely reported increase in financial scams over the course of 2020 and we may have a problem! Eduardo Castro, Head of Identity and Fraud, Experian UK&I, said: “The digital acceleration brought about by the pandemic means businesses have had to react to new challenges in ways that were previously unimaginable.” 
There has been a definite race to provide a remote, digital service within the pensions industry – one where arguably we were trailing behind the rest of financial services. We’ve done it with remarkable ease, but now it’s time to tighten the controls, and make sure we’re doing everything within our power to protect members and schemes.
The death/fraud link
For many years there has been a link between death and fraud – in particular with identity theft and continued pensions in-payment beyond the death of a member. Historical and monthly mortality screening solutions have been around for many years and are very effective for UK residents. But, many schemes are still using certificate of life verification to establish that their overseas members are alive and well. Ironically where the risk of fraud is at its greatest.
This method no longer works for many reasons:
- It’s not robust enough – signatures can easily be copied, and places risk on the administrator to validate on receipt – if checks are applied at all.
- Impractical to expect members to provide original documents and even then does not confirm that they are alive.
- It doesn’t have a place in a digital world, where our admin teams might be working from their own kitchen.
There are better ways to do this now. And not just for mortality checks…
Pre-pandemic, pension providers (even master trusts) carried out identity checks prior to setting up any withdrawal from a pension, and sometimes when making one-off contributions too. These checks often require members to provide their ID or a certified copy, and then post it to their provider. This is arduous – both for the member and the scheme.
The process was already slow and expensive, but working sufficiently enough to be left untouched for years. During the pandemic it became an area of challenge – not only to members who are rightfully staying home, but to the admin teams at pension providers, who are staying home too.
Technology can make it easier
The technology to support strong, secure identity checks already exists. It’s already in use in some small areas within pensions, and in much wider use across other industries. But this needs to become widespread, to become the norm rather than the exception.
Biometric identity checks improve the robustness of ID&V and proof of life, with the added benefit that they can be carried out by members with very little effort and from anywhere in the world. This is definitely the direction the industry is heading, and for good reason.
They work better because they not only check a name and date of birth against an official document, but it checks the document against a living person. It’s as close as we can get to in-person checks as possible! Plus, admin teams can be based anywhere, as long as they have access to the verified result.
Pension schemes must do more
Most pension schemes and trustees would say protecting their members is a central focus of the scheme. In today’s world, where fraud is on the rise, schemes need to do everything within their power to prevent members from being scammed. That means better processes and tighter checks which will enable schemes to strive in this increasingly digital landscape.
Nick Collyer, Head of Partnerships