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    Open world design - The saviour of pension scheme administration?

    By Tom Nimmo on Tuesday, July 19, 2016

    The computer game, Minecraft is something of a cultural phenomenon. It has inspired YouTube channels, global conventions, Lego sets, a film, and even a religion. The success of Minecraft can be attributed in part to the open world structure of the game. Open world games offer considerable freedom, typically allowing players to adopt a creative approach to completing objectives and interacting with the game’s environment. The only restrictions to this freedom are defined by the structure and rules of the game or the limitations of computing power. Players of Minecraft have embraced the freedom that the game’s open world provides, creating everything from working computers to the whole of Denmark. Whilst it’s doubtful that the expansive Minecraft universe will ever engage with the UK pensions industry, the concept of an open world structure does have a useful application to pensions software and pension scheme administration processes.

    There are occasions in pension scheme administration that require bulk data analysis or bulk data updates to be completed. Assuming that the pension scheme administration data is held electronically on a database, the approach to these kinds of projects is likely to involve one of two scenarios:
    • The export of the pension scheme data to a spreadsheet or other system for processing.
    • The coding of functionality into the pension scheme administration database.

    Both approaches have pros and cons associated with them. Exporting data can make it easier to visualise and control the process, especially if the bulk data exercise is being completed using a spreadsheet. External, standalone pensions software can also offer pre-programmed functionality that would be too costly or complicated to develop within the main pension scheme administration database. However, these approaches also carry the risk that pension scheme data is updated back to the pension scheme administration database incorrectly and external tools can lack effective audit controls making it difficult to track changes to the dataset or hold data analysis records.

    Coding new functionality into the pension scheme administration database can create powerful and efficient tools that can be run repeatedly and carry the benefit of having an underlying audit trail. Certain processes can even use existing system functionality, reducing the burden of additional systems development. Unfortunately restrictions will apply to many pension scheme administration systems in terms of the type of development that can be achieved, with most systems only allowing additional calculation routines or report queries to be created. Furthermore, the coding of even simple reports or calculations can require specialist knowledge that is beyond the common skillsets of many pension scheme administrators.

    A solution to all this lies with open world principles that allow pensions software to provide the necessary functionality to deal with bulk data analysis or bulk data update tasks in creative and efficient ways. Traditional pension scheme administration systems have a tendency to be quite rigid in their structure, with limited scope for customisation and fairly onerous bespoke calculation tools. Furthermore, historical attempts to develop more flexible systems have often been plagued by prohibitively high levels of complexity, impeding normal pension scheme administration practices. However, we have actually found that it is possible to create a user friendly pension scheme administration system that reduces the configuration complexity whilst maximising functional flexibility.

    The key to achieving this nexus of flexibility and efficiency lies with the design of the system. In our own pension scheme administration system, Mantle®, the structure of the database allows additional data fields to be easily created on member records. This means that every item of data relating to the administration of the pension scheme can be maintained within the system and new items can be created for data management work. All of the calculation and validation functionality that is built into the database can be applied to the data items, making it possible to perform analysis and updates in a controlled way, without the need to code complex routines.

    From our experience, this open world innovation empowers pension scheme administrators by allowing them to better articulate the pension scheme administration system functionality that they need, and have closer involvement in its implementation. These factors help to make the development of new calculation and analysis routines quicker to develop and easier to test and validate.

    One area that we have applied our open world approach to is in the development of a tailored solution to GMP reconciliation exercises. Using Mantle enabled our data management analysts to work with our GMP reconciliation administration specialists to integrate the data fields and functionality required to complete a GMP reconciliation exercise directly into the existing pension scheme administration records on the system. The rapid implementation of the functionality allowed the pension schemes administered on Mantle to press on with their GMP reconciliation exercises, without delays or false starts. By building upon the existing pension scheme administration functionality of the system, existing benefit calculations could be used for processes such as over and under payments, migration of data was minimised, and audit trails were maintained against member records. Perhaps most importantly, once the routines had been developed, they could be implemented by the pension scheme administrators again and again, for use on both fully administered pension schemes, and one-off GMP reconciliation service projects.

    For the past five to ten years the amount of change within occupational pensions in the UK has been unprecedented, but the changes have not necessarily provided more certainty about the future of the industry. The only certainty seems to be continued change and so the need for the industry to keep a pace with developments is critical. For this reason, the open world approach could provide the UK pensions industry with the tools to tackle the issues faced by pension schemes today and in the future, driving innovation and efficiency and delivering a better quality of service to pension schemes and their members.

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