Poor data costing schemes money and resources, study shows

Research by Heywood, a technology provider, found that almost a fifth of queries through the dashboards ecosystem will likely result in “possible” matches rather than confirmed matches due to “data inaccuracies”.

Basic information such as surnames and addresses were the most common areas of inaccuracy, often due to members not updating their details following major life events.

Correcting these errors could create “unnecessary administrative burdens for schemes and stress for members”, Heywood stated.

Louise Donohue, chief operations officer at Heywood, said: “Data isn’t just a technical issue – it’s a fundamental part of delivering a positive experience for pension savers.

“Every incorrect name, outdated address, or missing record represents a potential frustration for members and an avoidable cost for schemes. Now is the time to act.”

In addition, the report claimed that schemes could be losing thousands of pounds a month due to members having died but their records not being updated. It said more than 2% of members in its sample were “deceased but not recorded”, and estimated that this was costing schemes more than £250,000 per 10,000 members per month.

Earlier this month, a major study overseen by the Pensions Policy Institute reported that data from five of the largest defined contribution master trusts was “consistent and suggests a high degree of accuracy and quality”.

However, it also reported that more than 1.6 million records in its study were “invalid” as they did not have identifying features such as surnames, dates of birth or national insurance numbers.

Heywood’s Pension Pulse report was based on an analysis of approximately three million member records. It found that schemes with better quality data were often those with digital member portals that made it easier for people to update information.

Chris Connelly, chief strategy officer at Heywood, said: “The pensions dashboards era is upon us, and these findings confirm what we’ve long suspected – data quality will be the single biggest factor in determining the success of the project.

“Schemes that take a proactive approach now through the advice given in the [report] will not only be ready for dashboards but will also see wider operational and engagement benefits.”