Turning the clock forward, data is now held on modern platforms accessible online via PCs, tablets and phones. In many cases, data has been improved to keep up with modern demands for instant information - members wanting pension data to plan their financial futures and finance directors to monitor funding requirements. Different situations involving data apply different pressures on scheme budgets, but three main data-driven situations facing schemes come to mind…
Data for member engagement
This year’s Pension Schemes Act provides for pension dashboards targeted to launch in 2023 for the new Money and Pensions Service (MaPS). Trustees will need to feed in data for defined benefit (DB) and defined contribution (DC) schemes for members (past and present) to access live pension projections. Schemes with higher governance budgets already deliver live information to members via scheme websites, but the majority of schemes are smaller and face a steeper challenge.
Data for dashboards is just one part of engaging members with their pensions. As data helps retail marketers know what communications an individual chooses to receive, I read how it will also assist the pensions industry.
“Artificial intelligence (AI) could help DC members make investment decisions.”
DB trustees will be able to agree technical provisions based on predictions of benefits that members will take. More targeted member communications, including holograms of presenters was predicted at a PMI lecture a couple of years ago. It is all driven by data, and its use is evolving fast.
Data for equalisation
Following the high profile High Court rulings, schemes with Guaranteed Minimum Pensions (GMPs) derived from employers contracting out of the Second State Pension (and SERPS before) are painstakingly grappling with initially validating their GMP records against HMRC’s records before tackling equalisation for scheme members (and now those who transferred out since 1990).
Data for buy-outs
Well-funded DB schemes with wind-up in their sights will be looking to provide a full data set to life offices to avoid the higher premium costs associated with inadequate records from incomplete data validation projects.
“We’ve seen a business case for correcting data to achieve savings up to 5% of premium for spouses’ pension data for buy-ins/buy-outs.”
Pension trustees are familiar with their data scores having declared the latest assessments in annual regulatory scheme returns since 2018, and analysed how to improve both common and scheme specific data. In my experience, low-scoring scheme-specific data requires greater budgets to rectify, as it can derive from a myriad of historical record keeping problems and changes of administrator.
So, the data budget secured by trustees will depend upon its purpose. The dashboard is a new project to add to a scheme’s business plan and may well bring forward the need to make decisions on correcting inaccurate legacy data.
I joined with colleagues in sitting the exams last December and was proud to receive my PMI Trustee accreditation under Aptitude in February.
This article was featured in Pensions Aspects magazine May 2021 edition.
Last update: 6 May 2021