Case study: A renewed effort to ramp up digital tracing and mortality screening has been a boon to the Local Pensions Partnership Administration, with the exercise having the potential to cut costs, save time and improve actuarial valuations.
Prompted by the Pensions Regulator’s concerns, administrators such as the LPPA are now in deadly earnest over data, since new rules introduced in 2018 dictate that all trust-based and public service pension schemes must report to the watchdog on the quality of their data in their scheme returns.
The LPPA — a third-party administrator with 17 client pension funds, mostly local authorities but also fire and police schemes — works with more than 2,000 employers from the largest local authorities down to very small businesses, administering pensions for around 600,000 members.
Last September, it set out to improve its own records with the hire of Target Professional Services, a data validation and trace specialist.
It could be a decent number of people whose pension was potentially delayed unless we cleaned up that data
Rachel Blundell, LPPA
LPPA, like many administrators, found that a percentage of letters sent out to members would bounce back. Rachel Blundell, operations director at the administrator, highlighted the problem: “It could be a decent number of people whose pension was potentially delayed unless we cleaned up that data.”
Targeting data quality
Blundell explains that the rational for the data-cleaning exercise is driven by a need to improve standards and efficiency: “We had lots of legacy arrangements doing address tracing and mortality screening in quite different ways from different suppliers.”
To date, of around 18,500 address traces sent to Target since September, more than 80 per cent of these have been confirmed or updated, with 966 new addresses added, which has led to a manpower saving of 80 hours a month by LPPA’s retirement teams. In addition, the administrator has also received additional member telephone numbers and email contact details.
Blundell highlights an old truism: “It is always easier to stop a pension than to try to recover an overpayment.” With this in mind, mortality screening has also been improved, with the LPPA learning of 75 deaths a month due to new screening processes.
Better data quality also improves actuarial valuations with ultimately reduced employer contributions. Work in call centres has been reduced – on average, LPPA would receive 500 calls a day to its helpdesk with a further 700 email queries and 100 live chats. Efficiency savings have been made here too, she notes.
Using technology to speed up identification
To achieve these results, Target uses a two-pronged attack, starting with an auto search that would identify and verify whether a member is at the address, based on credit searches. If there is a need to contact a member, Target prompts individuals to use its biometric app, MyPensionID.
Nic Jones, business and innovation director at Target Professional Services, explains that writing to a member and asking for them to confirm their data “would take months”.
“There was a lot of paperwork involved and it was quite laborious”, such as requiring certified documents with a notary, he notes.
Jones details that with the app, members “verify themselves against an official document such as national identity card or driving licence”, and then “they take a selfie to show they are alive”.
He adds: “The average user of the app is 58, while the oldest is 96 and we have four 96-year-olds using the app.”
There are several other tracing companies that have similar apps, such as Jumio, GBG and Idemia.
Target identifies 1,748 deceased members
With the task of screening 198,000 records for potential deceased members, Target first identified 19,217 deceased individuals that could have been LPPA members, by comparing the administrator’s data with the government death registrar. From these, 10,466 were removed as they categorically were not members of the schemes’ LPPA administers, says Target’s Nic Jones. Through investigation, the data validation and trace specialist reduced the number to 1,748 deceased members that they can certainly say or are highly confident that are scheme members, which can now be updated in LPPA’s records.
However, Colin Miller, head of XPS member engagement hub, cautions about the use of this type of technology. “If you have found an incorrect member with the same date of birth and name then their selfie and documents will match up — but that doesn’t mean you have the correct person.
“So for us, this is to be used with care and as a back-up to other information that should be acquired from the member to fully verify identity.”
Colin Wheeler, administration lead at Spence & Partners, has used Target services with schemes the professional trustee company administers that are going through assessment at the Pension Protection Fund.
With other players in the market, such as LexisNexis and ITM, Wheeler believes that “all schemes should now be engaged with one of these businesses and be using their services on an ongoing basis”.
