Restoring member data integrity as dashboards approach

According to recent research from Lane Clark and Peacock (LCP), fewer than four in 10 pensions professionals have a project plan in place for the pensions dashboard, despite the government’s expectation that larger schemes be ready to connect by early next year.

This lack of readiness is tied directly to the quality of scheme records, which have not kept pace with the demands of the digital age.

Concerns over “surge capacity” – the risk of schemes being overwhelmed with inquiries once dashboards go live – exemplify the deep-rootedness of the problem. Not only is achieving connectivity a major challenge, but the resulting cascade of members searching for lost pensions will present schemes with significant administrative difficulties.

Decades in the making

The dashboard movement is a response to systemic issues with the preservation and auditing of consumer data within the pensions sector. While the impending dashboard connectivity deadline has created a sense of urgency, years of data deterioration led us to this point.

By 2017, the industry had recognised auto-enrolment’s seismic impact on data integrity in the defined contribution (DC) space, amid an increasingly mobile workforce.

Even before that, scheme record-keeping was strained by decades of demographic change and evolving member lifestyle patterns, especially at legacy defined benefit (DB) schemes. Operationally, the shift to digitisation – and the seemingly endless chain of database migrations – inevitably caused inconsistencies and gaps in schemes’ records.

For those responsible for addressing the current shortfall in member data, when it rains, it pours. Beyond dashboard connectivity, the state of member scheme data is a key limiting factor.

Delivering guaranteed minimum pension equalisation relies heavily on accurate scheme data. Regulatory scrutiny – whether from the Financial Conduct Authority’s Consumer Duty, the Pension Regulator’s data review regime, or otherwise – is intensifying. As the pace of transactions mounts, from de-risking to master trust consolidation, the impact of poor member data is felt in spiralling costs.

Going digital

It is now widely accepted that restoring the integrity of member data is a priority for the pensions sector. The question is, how? How can faulty, out-of-date, and missing member data be restored?

Traditional data maintenance techniques – often territorially limited, cumbersome, and outdated – are insufficient. They cannot meet the demands of the 21st century.

 The contemporary solution is to leverage the surge in members’ online activities. By 2020, 59% of pensioners were active on social media, and it is estimated that 70% now spend at least five hours a day online. This figure is even higher for deferred members.

By responsibly mapping members’ digital footprints, pension providers can dramatically improve success rates in locating missing members, assessing their entitlements, and ensuring proper administration.

The digital tracing solutions necessary to accomplish this are readily available and can be deployed quickly in a compliance-friendly manner. Moreover, in an industry centred on members’ interests, early adoption of innovative technologies for restoring member data is a key marker of excellence.

Addressing the accuracy of member data is not just a necessity for dashboard readiness but a significant opportunity for the pensions industry.

By embracing digital solutions, providers can enhance their operational efficiency, ensure compliance with regulatory requirements, and ultimately offer better service to their members.

Moving towards accurate, up-to-date data paves the way for a more robust and resilient pensions landscape, benefiting providers and members alike.

Max Lack is business development manager at Heka Global.

Further reading

Errors ‘could costs DC members thousands’ in lost contributions (17 June 2024)

An end-of-term report on pensions dashboards (5 June 2024)

Fewer schemes, more data: TPR’s changing workload (22 May 2024)