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    The two words standing in the way of a better outcome for your pension scheme…

    By Tom Nimmo on Monday, January 04, 2016

    Two words - One huge hurdle

    I’ll get straight to the point - the two words are ‘data migration’. Whether a pension scheme is changing system, changing administrator, or simply providing valuation data to the scheme actuary, data migration is something that has to be considered. Unfortunately, these two words are often unpopular with pension scheme trustees as they tend to be associated with high costs and frustrating timescales. However, if managed properly, the data migration process could be the gateway to an all-round improvement in service that can be appreciated from the trustee board, right down to individual scheme members. All too frequently data migrations are overlooked as being a necessary evil, instead of a golden opportunity to get pension scheme data in shape and take advantage of improved technology and services on offer across the industry. Here are just a few ways of seeing data migrations in a different light.


    The Cost of Migrating
    Scheme migrations are complex, major operations that typically involve entire teams of people with different sets of expertise, from systems technicians to administration specialists. These teams will be engaged in a significant volume of work during the migration process. What I am about to say here may seem counterintuitive, but trustees should consider paying for the full cost of data migration. If a new service provider offers to cover all or most of the cost of a data migration, be cautious to accept the deal unless it is absolutely clear that all standards of best practice will be adhered to.

    The reason for this is two-fold. By paying for the cost of the data migration, trustees can be more exacting in the work that is carried out. This means gaining oversight of the various stages of the migration project and ensuring that data reconciliations, migration queries and membership statistics are all properly reconciled and resolved. It may be a slightly cynical opinion to hold, but not only will paying for a migration help to ensure that the service meets needs of the scheme, but providers will be more inclined to deliver that service to a higher standard.

    The Benefits of Migrating

    Whilst data migrations are by no means the panacea to all pensions ills, getting the process right can bring tangible benefits to the management of the pension scheme, with positive results that can accumulate over time. At the heart of good data migration is the opportunity to improve data quality and processes. As already mentioned, some of the common data migration occurrences include a change of service provider or a change of systems, and the motivation for this change normally is the desire for a better service. The benefits of receiving an improved service can be all the reward required from a data migration, with the process being nothing more than a means to an end. However, a properly managed data migration exercise with clear objectives can provide some additional cost benefits, just by adhering to principles of best practice.

    Reconciling member numbers by status and reviewing benefits in payment, through to full data and benefit audits, can and arguably should be completed during a migration of member data between administration systems or providers. It ensures that no errors creep into the data or associated administration practices of the scheme during migration, as well as helping to identify any potential past issues. Taking time to get things right from the off can protect against potentially costly rectification exercises in the future, as well as helping to maximise the cost efficiencies achievable through process automation.

    The Benefits of Not Migrating


    Not migrating data is less to do with inaction in relation to scheme data, and more about making strategic decisions regarding systems and processes so that data migrations are not required. This is really a case of creating better integration between systems and taking advantage of built-in system functionality wherever possible in order to make processes joined-up and efficient. Data migrations may still occur, but the process is fully automated so that updates to one system are reflected in another system as a matter of course. Integration of this type is frequently found between pension administration databases and pension payroll databases, although it is worth emphasising that poor integration can lead to problems, especially if the flow of information is restricted in one direction. This is often seen when an update to the pension payroll system, perhaps closing a record, is not fed back to the corresponding record on the pension administration system.

    Integration can be taken one step further, as is the case of our own pension scheme administration and actuarial valuation system, Mantle. Integration is achieved here by having a single system for all functionality, meaning that there truly is no data migration involved in providing full administration services or daily actuarial valuations, save for the initial installation. Cost benefits can be realised by removing the amount of work involved in manipulating data for valuations or other large scale projects. Furthermore, the access to validated, live administration data for use in actuarial valuations or investment risk management exercises can enable advisers to provide more relevant services and offer trustees the chance to make the most of beneficial opportunities as they arise.

    Dealing with Data Migrations

    As part of any tender process for a new service provider or new system, I would recommend that trustees always complete a full cost benefit analysis that extends to data migration exercises. In thinking about getting the most from a data migration, trustees should consider the following factors as part of their analysis:-
    • The current state of the data in terms of its quality and how it is recorded (e.g. database, spreadsheets, paper files, etc.).
    • The complexity of the pension scheme in terms of the number of benefit categories and historical changes to scheme rules that could affect benefit calculations.
    • The strategic goals of the scheme in terms of potential future service requirements and member obligations.
    • The suitability of the chosen service provider or system to meet those strategic goals, together with their costs and timescales.
    • The immediate expectations of the data migration process and any associated exercises.
    • The cost benefits of the data migration process, either in immediate returns or longer term projections.
    • The means of ensuring that the data migration will be completed in line with those expectations.
    • The means of measuring cost benefits versus the predictions.
    Hopefully, with the right tools and expertise at their disposal, pension scheme trustees can turn the dreaded data migration process to their advantage, capitalising upon all of the modern innovation that exists in the industry and creating positive outcomes for pension schemes and their members.

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