Pension scheme digitisation: don’t overlook your non-member data

Curtis Phillips, Head of Process Innovation and Digital, Aptia

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Poor data is one of the main barriers to digitisation of pension schemes. And that includes the swathes of non-member data that make your scheme tick.

Pension schemes face many obstacles when it comes to digitising their services. A recent report by the Pensions Administration Standards Association (PASA) highlighted the slow progress made by the industry so far.

We discussed PASA’s white paper and the added urgency of digitising pension administration in the first article in this series. This piece kicks off three further insights about issues related to digitisation that we think need closer attention – starting with non-member data.

‘Data’ usually means member data

One of PASA’s consistent themes – and a problem for most pension schemes – is the issue of poor data. If your data isn’t in good shape, you won’t be able to digitise your pension scheme.

The white paper wasn’t explicit about what it meant by “data”, but the writers were almost certainly referring to member data. And I think most readers would think this was the case.

This makes sense because member data has been a leading issue for pension schemes for decades. Most trustees are probably thinking about member data at any given time – from smoothing the course to liability reduction to expanding automation and meeting regulatory requirements such as for pensions dashboards.

Non-member data is just as important

However, when thinking about digitisation there is an equally important data issue facing the industry: non-member data – the information we use to administer a pension scheme.

Non-member data includes a host of items such as:

• Scheme rules including factors used in pension calculations
• Scheme calendars – renewal date, payroll dates, contribution dates, valuation dates
• Trustee discretionary decision requirements
• Treasury information such as bank details and disinvestment processes
• Contacts with actuaries, trustees, accountants, consultants and HR

The definition of clean data is the same for member and non-member data. We have to store information consistently, accurately, without gaps and with proper controls (including change control, adherence to data practices, and single source of truth).

All our data must be digitally consumable

Most schemes can meet requirements when it comes to manual processing. At Aptia, our human administrators would know if they can trust the member data, and they would know where to get the information they need to complete their task.

But digitisation also means our data must be digitally consumable. This means by calculation engines, document production tools, reporting applications and pensions dashboards to name a few.

Let’s look at a simple digital process that would fail if non-member data wasn’t digitised and any of the required data wasn’t digitally consumable.

BOX:

A member has received a retirement quotation that allows them to elect to retire online – by submitting their choices and other required information directly into a portal. The administrator is also looking to automate the settlement tasks where possible. And to automate the settlement, the member submission, member data and non-member data must all be digitally consumable.

Non-member data runs throughout this basic scenario. Here are just a few pieces of information you would need:

• Name/directory location of the member’s electronic document management store, member record, payroll record and bank account details
• Payroll pay dates, payroll cutoff dates and payment in arrears or advance
• External fund manager or additional voluntary contribution provider
• In-payment source/split names to be created on the member record
• Whether trustee or employee approval is required

In essence, the digitisation journey towards greater automation of processes critically depends on non-member data. Take the basics of Pensions Dashboard standards: where will the automation find the right scheme information for a view request?

Member service and efficiency are at stake

As an industry, if we let non-member data fall through the cracks while focusing heavily on member data, we could be storing up trouble. First, there’s the quality of the service we provide to members. If non-member data isn’t stored properly, we risk errors that will harm members’ experience and make them unhappy.

Second, we’ll fail to meet our efficiency goals. In the manual world, poor storage of non-member data means human administrators spend extra time finding the information and understanding what is relevant. And if schemes digitise without storing non-member data properly, their digital processes may fail.

There’s still time to tackle non-member data

At Aptia, we have been thinking about the importance of non-member data for some time. We have developed a database that stores information with a user-friendly interface and all data points available via an interface. And we have a dedicated resource to ensure we and our clients get the maximum benefit from this new tool.

But if you haven’t paid much attention to non-member data yet, you’re not alone. There’s still time to get to grips with the issue and make it a core part of your digitisation strategy.