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    Why can’t I manage my pensions online?

    By Cyril Gaffney on Tuesday, September 27, 2016

    With demand for pension scheme member engagement at an all time high, the time has never been better to capitalise on the current public interest in pensions by giving easy access to pensions information and advice.  However, consensus is still being formed as to how the industry can best achieve member engagement and educate pension scheme members on saving for (and spending) their retirement incomes.

    With huge growth in the use of online communication it is likely that many of the engagement solutions developed in the coming years will be web based and so the pension industry faces the challenge of providing secure online platforms that members can access and control from any remote location. 

    This will obviously lead to such questions:  Why move from paper?  Who benefits from this? How much does it cost?  Each pension scheme service provider will have to answer these questions.

    The Catalysts

    There are a couple of big changes due to land on the plates of all pension scheme trustees and pension scheme service providers in the next two years, that are likely to shape the way that member portals and other forms of member interaction will develop.  Both will confront the industry to shift away from paper to more responsive, secure forms of electronic communication.

    It’s been announced that the first change will be due to arrive in prototype form in spring 2017 with the release of the pensions dashboard.  Backed by government policy and the Pensions Regulator, and involving input from large pension service providers, the new dashboard is envisioned as a system that will facilitate the sharing of pension scheme data, enabling pension scheme members to access information on all of their pensions saving from a single access point.  It is unclear at this stage what additional functionality the pensions dashboard will offer to members, but the Pensions Regulator is actively seeking development applications from fintech companies across the UK. 

    The second change has been made less certain by Brexit, but it is likely that the EU General Data Protection Regulation will force a more joined up and engaged approach to both pension scheme data processing and responding to member data requests.  One of the reasons that we can be confident that the new regulations will be enforced in the UK is that the scope of the regulations will apply if the data controller, the data processor, or the data subject are based in the EU.  The latter is important as many UK pension schemes will contain members who will remain EU citizens post-Brexit.  The new regulations will enforce the Right to Data Portability, which provides data subjects with the right to transfer electronic data from one system to another.  This could effectively mean that pension scheme administrators and trustees will need to allow members to download all of their electronic pensions data in a structured format on demand.

    Dealing with the past, whilst looking to the future

    So far it seems that a move towards electronic member portals will be a good thing for pension scheme members.  In addition to keeping in touch with pension providers, the other key benefits to pension scheme members of online access are the ability to make changes or requests, view benefit projections, shape their benefits using modelling tools and access all the general pension scheme communications in a central online location.  However, the increased expectations around instant access are putting pressure on the pensions industry to do what it takes to satisfy these demands.

    Occupational pension schemes, especially defined benefit pension schemes, are generally very complex, with pension scheme records dating back potentially in excess of 50 years.  When many of these schemes were established, member data was handwritten on record cards and calculations were performed manually with pen and paper.  Although the quality of member data has been improved through the computerisation of records and the Pensions Regulator’s guidance on record keeping, many pension schemes will still fall well short of having data that is clean enough to put online for members to see, let alone provide automated pension benefit calculations. 

    Fulfilling the demand for online portals may come at a price, if true automation is prevented by poor historical data quality.  That price could take the form of the work to further digitise and rectify pensions records; to automate pension scheme benefit calculations, and to resource the pensions professionals who can offer additional support to members.  Therefore, in the short term, the service focus of a pensions industry looking to develop more efficient and engaging services to members should look toward pension scheme data management solutions. With the advent of dashboards and portals the need for accurate, well maintained benefit records and automated processes is more important than ever, or else the coming flood of online member requests might overwhelm the current resources of pension scheme administrators.

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