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25 September 2020

4th ITM Student Essay Competition - Joanna Ashard

Covid-19 has changed the way people and companies in the pensions industry are working. Will these become permanent changes in working practise, operational delivery and communication or will old habits and methods return? What can we learn from the current practices and what does the speed of change since restrictions were imposed tell us?

On 31st December 2019, Chinese authorities notified the World Health Organisation (WHO) of an outbreak of pneumonia in Wuhan City, later classified as a new disease: COVID-19.  On 30th January 2020 WHO declared the outbreak of COVID-19 a Public Health Emergency of International Concern.  And so it was, as globalisation allowed the disease to reach almost every part of the world catapulting the business world into turbulence and uncertainty.  In the UK, the first cases were reported on 29th January and events unfolded quickly thereafter.  In order to halt the spread of the disease and protect the NHS from demands it would be unable to meet, Boris Johnson announced on 16th  March that people should ‘start working from home where they possibly can’ and avoid unnecessary social contact.  Overnight, there was a huge increase in the number of remote workers (a survey carried out by the Times newspaper suggests an increase in London from c11% to 91%), which inevitably had a profound impact on working practices.

WFH is by no means a new phenomenon - in medieval times people lived in houses which were a combination of kitchen/spinning/weaving/butchery/byre etc.  What made the Covid experience so different, however, was the speed of change and reliance on technology for survival.  It was a seismic shift for a significant proportion of people working in the pensions industry who, for the most part, are traditionalists working in a knowledge industry and accustomed to working in physical offices surrounded by colleagues (and sometimes a certain amount of paper).  Pre-Covid, remote working was not commonplace.  Perhaps this was because pensions work is technical and often complex, and so relies heavily on sharing information and expertise, with a rigorous peer review culture which benefits from physical proximity.   WFH is (or was, pre Covid-19) generally restricted to the odd day to write up meeting notes or for undisturbed ‘thinking time’. 

But the industry proved both well prepared and resilient, enabling it to rise to the challenges and overnight it embraced the remote delivery model.  The speed and efficiency of adaption was impressive. Whilst we can’t yet dismiss the possibility that some imperfections might emerge in future, particularly when post-year end audits scrutinise the processes and procedures, the operational delivery of the pension world seems to have sailed calmly on.  At least to the outside world, although there was an element of the Swan: graceful movement above the water surface and much propulsion activity underneath.

Other aspects of the industry (not our focus here, but undoubtedly so important that they deserve at least a mention), such as investments, DB funding and employer covenant strengths are, of course, profoundly impacted by Covid-19.  But the Pensions Regulator issued timely and pragmatic guidance to trustees which undoubtedly helped to steady the ship.  For example, in allowing for the possibility of a temporary suspension or reduction in contributions for distressed employers useful flexibility was afforded at a critical time (although, in the event, the evidence is that only around 10% of employers approached trustees for such a reduction). 

Technology enabled the pensions industry to continue to deliver essential services to  those charged with running schemes and their membership.  Whilst the industry might have an unfair reputation for being somewhat antiquated to the untrained observer, the reality is very different. Over the last forty or so years, we’ve come a long way  from hand-scribbled member record cards filed in a dusty cabinet.  Whilst not every trustee board  may have had ‘pandemic’ specifically listed as a  major risk on their register, almost all had flagged Business Continuity in respect of providers to be monitored and mitigated and  so insisted on regularly updated responses, and scrutinised them carefully.  Well-rehearsed processes were in place, therefore, to allow the overnight switch in service delivery, thanks to IT support teams working flat out to ensure secure remote access to all systems and data bases.  Whilst most providers were already in a paperless environment; for example, with  post being scanned at a central source, digital member records, automated calculations etc and systems in place to allow access to databases, those few who had failed to invest in technology faced their worst nightmare.

One of the main changes in working practices was reliance on virtual meetings.  WFH meant no physical interface with either colleagues or clients:  Zoom/Microsoft Teams stepped into the breach making sure we stayed connected.  PASA provided timely guidance to the industry, identifying basic enablers to help administrators transform their delivery, recognising the need to replace the office environment with virtual daily operations and leadership calls.   Trustees also met virtually, with all their papers being provided electronically.  The moment of recognition for secure, online document repositories had come, requiring even the most luddite of trustees to get their passwords sorted and get online!  Those vast paper mountains which traditionally arrived with trustees for reading a week ahead of their meetings had become obsolete.  The pandemic had hastened a greener way of working.

PASA and the Pensions Regulator provided helpful guidance on maintaining essential services.  Trustees acknowledged there was inevitably going to be some temporary slippage in SLAs and delivery of non-essential items.  Administrators streamlined their processes, communicating with members by phone, email or electronically through member portals, webchats or secure websites.  They started to build electronic contact databases for future use.  To stop the slow and cumbersome submission and return of precious

documents, they  validated member details biometrically or by other identification validation (a long overdue refinement from some administrators), and ensured all payments were electronic.

As described above, remote working and an acceleration in digital transformation were undoubtedly the two biggest impacts of Covid-19 on working practices in the pensions industry.  Will these changes be permanent?  

WFH has not proved the productivity apolocalypse that some tradition bound business leaders had feared, with internet traffic statistics indicating a sharp increase in upload traffic (an indicator of work).  According to a study by Milkround in Generation Z staffers (the youngsters) 60% had become more productive during lockdown.  With this reassurance, the consensus is that there will never be a reversion to pre-Covid days.  Tech companies such as Twitter have announced that those employees who were able to WFH had the option ‘to continue to do so forever’.  It is unlikely, however, that the physical office is dead or even fatally wounded.  Business leaders are deliberating on post-Covid scenarios, but it seems likely that more flexible arrangements will become the norm.  An example might be the adoption of  team structures and attendance at a physical office maybe three days in ten.  This model is likely to suit the pensions industry more than the Twitter extreme.  Physical togetherness brings much that should be preserved.  Without it, how do we train our youngsters in best practice if they cannot constantly shadow an experienced colleague and tune into to their telephone calls and conversations – body language and all?  We have to be mindful that, as well as being a knowledge business, the pensions industry is also a people business.  Without a physical office, how do we celebrate our successes?  How do we find our way through the most complex of problems without taking time out to share a coffee with our mentors or engage in those water-cooler chats?  How do we make the future generation feel secure and embedded  in a culture of professionalism if they are always sat alone at their kitchen tables or balancing a laptop on their knee in a bedroom?

Virtual meetings are much better than phone calls, but they are not a perfect replacement for face to face meetings, suggesting that there will always be  a place for the latter.  Once we become thoroughly familiar with the workings of virtual meetings (including when to mute and unmute!), they are very efficient and effective.  There are, however, some shortcomings.  For example, we get most of our information about what people are thinking and how they are reacting from facial expressions.  Body language also helps the brain remember interactions by attaching emotion to them.  Virtual meetings seem to provide less information and generate less emotion, with the end result that we don’t remember as much from virtual meetings. 

The acceleration in digital transformation will undoubtedly continue.  First, Covid-19 is unlikely to be the last of these types of crises so that state-of-the-art technology is now essential for long-term survival.  Secondly, technology promotes efficiency, accuracy and accessibility.  In the post-Covid world, for example, communications may be centred around member portals, which will become commonplace, allowing instant access to essential information and ‘what if’ calculations. Seminars and presentations may be replaced by podcasts, which will be made available to members. Trustees will communicate with members electronically wherever possible.  Trustees and CFOs will have access to all their documents and critical information online, including time-critical items such as funding updates and feeds from fund managers.  The pace will increase and with it will come a sense of energy, immediacy and relevance.  It will be a more rigorous and accountable environment - a better place to work, providing improved services to members and trustees alike.

The changes demanded by the pandemic were implemented almost overnight.  The ability to make the transformation at such high speed tells us a number of things.  First, the pensions industry comprises highly competent and flexible individuals, with leadership able to quickly refocus and settle their workforce.  Secondly, the industry is in good shape, particularly from a technology perspective.  Information security teams were able to secure companies’ digital assets, alert to the fact that the dash to remote working presented opportunities for cyber attackers. The industry had much to be grateful for its IT teams in supporting and securing its remote workforce:  

The seamless transition also tells us that all the work done in preparation for GDPR in 2018 is invaluable.  We know what data we have, why we hold it, where it comes from, where it might be transferred and what permissions we have for usage.  In a world of remote working, it is critical to both have this information, and have it clearly documented.

The speed at which these changes were made provides an example for the future.  Some companies have now set themselves strict timetables for implementing change.   An example is the ‘two week’ rule:  if work practices can be transformed overnight, then surely no business decision should take longer than two weeks.  Similarly, is that 40 page report really necessary?  Could it have been just as effective in two pages?  As a result of Covid-19, we will undoubtedly work smarter.

Whilst we need to keep sight of our audience and remember that a significant number of pension scheme members may not be computer-literate, the changes forced upon the industry by Covid-19 should undoubtedly be seized and taken forward to build a future-proof way of working.  We can work  faster and smarter, at the same time as  promoting a more modern, flexible environment and  better work-life balance for all those who those who work in the industry.

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Last update: 1 October 2020

Joanna Ashard

Pensions Projects Specialist – Very Flexible working

Salary: £35000 - £45000 pa

Location: Essex or Hampshire – Very flexible working

Pensions Quality Analyst

Salary: £25000 - £40000 pa

Location: Work for Home or Office locations countrywide

Client Relationship Manager

Salary: £30000 - £50000 pa

Location: Bristol / Home based with need to attend Bristol office

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