Schemes say cost-saving key advantage of technology

Industry experts highlighted the huge advantages of new risk management tools on the market but emphasised the need for correct guidance and advice to be put in place for employers, trustees and consultants to reap the full benefits.

The survey by consultancy Barnett Waddingham, conducted at the National Association of Pension Funds conference in October, indicated that nearly half of respondents (44 per cent) prioritised streamlining systems in order to reduce scheme expenses when using technology.

Using technology to help streamline systems and processes emerged as the first priority ahead of allowing a focus on advice rather than calculations now technology crunches the numbers (21 per cent); helping improve member engagement (20 per cent); or to aid advisers to clarify key points (14 per cent).

Raj Mody, head of pensions at PwC, said: “It’s not just technology for technology’s sake. If you deploy technology in the right way you can transform the way the pension market operates.”

Mody said historically the pensions industry has been dominated by scheme’s multiple advisers running their own in-house administrative and valuation systems, a trend he saw resulting in widespread duplication of work, inconsistent outputs and a lack of transparency.

“The trustee is stuck at the receiving end of this, it’s slowed down, it’s expensive and it takes ages to get anywhere,” said Mody.

Industry experts said the development of actuarial valuation systems had improved accuracy, while the ability to view the impact of shifting underlying asset values in real-time has helped to improve the transparency of dynamic strategies. “We’ve identified savings through a more accurate valuation approach,” said Mody.

Paul Hamilton, partner at Barnett Waddingham, said he had seen technology really changing trustee board meetings but thought the real time element assisted sponsors more than trustees.

“It’s useful for trustees to see the volatility on a day to basis but unless they’re planning to do something at a particular time between meetings they probably won’t do anything until the next meeting and discuss it then,” he said.

Monica Cope, chief operating officer at scheme data specialists Veratta said data protection and security could be enhanced through the use of new technology applications and systems.

“These applications will stop emails being sent across and the risk of information being transmitted unencrypted,” she said.

Cope also said employers and trustees must receive advice and guidance on how to put new tools to best use.

"Platforms are without a doubt adding value by allowing employers and trustees to see how changing functions will affect the scheme. It's important to put these tools in context with guidance," she said.