Russell Dixon, insurance director at credit reporting agency TransUnion, explains how the pensions dashboard is pushing providers to harness better data, and how this could ultimately support better consumer wellbeing.
As with wider financial services, the digitisation of products, services and operations is essential to adapt to changing consumer needs, and the pandemic has brought this into even sharper focus.
Further still, the Pensions Dashboards Programme is set to revolutionise how providers use and manage data, radically changing practices that had previously relied on disparate approaches to portfolio management.
So, while pension providers reconsider their data management strategies and adjust to a significantly more digitised space, the pertinent question to ask is whether or not the sector is looking after its customer data in the best possible way?
Keeping up with your customers and ensuring they stay informed on the performance of their pensions has never been more critical
Managing increasingly complex portfolios
Consumer pension portfolios are more complex than ever. Across the board we are seeing people in the UK taking out pensions in record numbers.
According to a recent retirement study, millennials have an average of two pensions each, so while this generation is under significant pressure to get on the housing ladder and pay off student debts, it also seems to be saving for later life.
Other factors are at play here. For instance, with the growing gig economy showing no signs of slowing down, we are seeing an increase in people accumulating smaller, self-employed pension funds.
The Pensions Dashboards Programme makes it possible to trace and consolidate various pension schemes in one easy-to-use place.
Yet, to make the dashboard work seamlessly, and for it to really represent a step change for consumers, pension providers must feed the portal with integrated and up-to-date information.
Addressing the data dilemma
More robust portfolio management processes need to be adopted by life and pensions companies to get the best results from the new infrastructure.
For example, there is currently a general reliance on the identification of pension funds by national insurance number — which carries the risk of transcription errors, names that can change with marriage and addresses that become outdated if a person moves house.
These leave pensions providers at risk of endangering data standards with inaccurate information.
Likewise, data degradation due to mergers and acquisitions, as well as business process outsourcing — both of which are typical for a life and pensions company — can leave businesses out of kilter with today’s digital consumer portfolios.
To mitigate this, data-driven solutions for life and pension providers are saving businesses a considerable amount of time.
They do this by harnessing data from information providers, using financial records to trace the same identity across multiple policies and create a single customer view that highlights multiple relationships with the same individual.
Once established, this provides a comprehensive picture, even in instances where circumstances — such as name or address changes — have occurred.
It also means pension providers can easily monitor multiple accounts and get alerts in the event of any changes.
Keeping up with your customers and ensuring they stay informed on the performance of their pensions has never been more critical. As well as supporting consumers’ future financial wellbeing, this can also help prevent fraud targeted at dormant accounts.
Reaping the rewards of insights-led engagement
As the complexity of their pension portfolios increases, people need to have a high degree of confidence that the companies looking after their future funding can trace all the pensions they have paid into over the years.
And when it comes to selecting providers, trust is a key factor for more than four in 10 consumers, according to TransUnion’s Consumer Credit 2022 white paper.
By choosing pensions providers that can ensure clear visibility of multiple accounts, consumers will get a better picture of their retirement savings, including uncovering lost or dormant pension pots, which could be worth a colossal £37bn collectively, according to recent reports.
As the market continues to evolve after the economic shock of Covid-19 and the current cost of living crisis — with 58 per cent of households claiming they reduced discretionary spending over the past three months — it is essential that pension providers have an understanding of their customers to identify, engage and serve those in different financial situations and ensure appropriate product referrals.
Now, more than ever, pension providers need to be thinking about data management. The Pensions Dashboards Programme is intended to benefit consumers with a more streamlined and personalised experience and brings with it the opportunity to revise and enhance existing processes.
This has the potential to deliver major efficiencies for providers that can harness data and insights to support consumer wellbeing — something we call using ‘information for good’.
Russell Dixon is insurance director at TransUnion
