Schemes can’t afford to continue neglecting data administration

Many people currently find understanding or engaging with the pensions system both daunting and confusing. The pensions dashboards are designed to give individuals a consolidated view of all their pension savings, giving them clarity and a reality check on their future financial prospects. 

This should in itself boost pension saving, providing immediate and long-term benefits for individuals, society and the economy. 

Mass testing of the dashboards will start in spring 2023, when regulation will also begin to compel pension providers and schemes to join the digital ecosystem that supports the dashboards. 

Data quality is what determines the quality of a scheme’s or provider’s work for scheme members and pensioners

This a collective endeavour, with no central database: instead, the ecosystem enables dashboard users to send and receive data to and from ecosystem participants. 

But that will only work if pension providers, schemes, trusts, administrators and other service providers ensure that the data they hold is “dashboard-ready”. 

That means it must be accessible, accurate and aligned with data standards published in 2020 by the Pensions Dashboards Programme, which has responsibility for the design and implementation of the dashboards ecosystem.

Today, 2023 may still seem a long way off, but as each week passes the need to make this data dashboard-ready becomes more urgent. 

For many schemes, this process will pose a significant challenge, but it will also deliver other useful benefits. However, failure to meet the deadline will create further problems and risks for providers, schemes and other ecosystem participants — and ultimately for scheme members.

In December 2020, the PDP published the data standards with which ecosystem participants must comply. 

They cover both “find” data (personal information supplied by a dashboard user in order to find all their pension pots) and “view” data (information about each pension held by ecosystem participants and made available to dashboard users). 

The PDP is now calling on all providers, schemes and any other entities holding find and view data to ensure it is dashboard-ready. These entities must study the data they hold to define which are find data, and must ensure they can provide all relevant administrative and pension income view data — including data items related to pension type — and to an individual’s estimated retirement income amount. 

The regulatory mandate to deliver dashboard-ready data will be one unavoidable reason to meet the 2023 deadline. 

Another will be that with every other ecosystem participant preparing their data for the dashboards, it will soon become very clear which providers or schemes are achieving best practice and which are falling short — and by doing so are failing to support the dashboard, the pensions system, and their own scheme members. 

The advantages of dashboard-ready data

But ensuring your data is dashboard-ready will also offer additional benefits. 

After all, data quality is what determines the quality of a scheme’s or provider’s work for scheme members and pensioners. 

In the words of the authors of a 2020 Pensions Administration Standards Association white paper, which examined pension scheme automation projects — including the dashboards —undermined by poor-quality data: “Technology can’t run efficiently without good data, and high-quality data is the foundation of good pension scheme governance”. 

Making data dashboard-ready is the first step to reduce the risk of incorrect member benefit calculations and other errors. 

Future steps, like a data journey plan and benefit audit will ensure greater accuracy in the completion of bulk activities, such as valuation exercises or production of annual statements.

It will deliver practical and efficiency gains that make both administration and governance of schemes more effective, in part by making it easier to use new technology to improve processes and/or member and pensioner services. 

Reducing the risk of data errors will also reduce the risk of reputational damage associated with data problems, and will nullify litigation and compliance risks that might otherwise threaten a pension scheme’s trustees or its sponsoring employer(s). 

Finally, accurate data and improved data management will facilitate preparation of pension schemes for buyout or buy-in derisking exercises, which could otherwise be delayed or derailed altogether by problems linked to poor data quality. 

Preparing data properly in this way will also give schemes and sponsoring employers the ability to act quickly if circumstances change and it becomes necessary to accelerate progress towards a buy-in or buyout.

Meeting the deadline for making data dashboard-ready will ensure a provider or scheme can play its part in an initiative that can deliver huge benefits to the whole pensions industry, and to individual savers and scheme members. 

Enhancing data quality through this and a data journey plan will protect schemes and providers against financial, regulatory and reputational risks.

But the secondary benefits of going through this process may eventually prove to be at least as important. 

By improving every aspect of operations, management and governance, schemes and providers will enhance the quality of the work they do to safeguard and grow the funds with which they have been entrusted. 

Improve the quality of your data and you improve every other aspect of your work.

Wayne Gibson is NPT lead at Buck