What’s the point?
There are around 30 pension providers an employer can choose to set up their workplace pension and around 40 further providers who will convert their existing workplace pension into a scheme that qualifies for workplace pension.
That means up to 70 different ways of doing thing s- passing data and money from one place to another.
The point of a common data standard (CDS) is to reduce 70 to one, making the job of those running payroll and managing auto-enrolment processes, a whole lot easier
Why does this matter?
- With multiple processes comes risk- risk of things going wrong and the opportunity cost of things not going right!
- Without a CDS, the small players risk being unconsidered, payrolls may operate preferred lists and exclude all but a handful of providers
- Without choice, pressure on innovation is reduced, new players cannot enter the market and prices could creep up – CDS ensures market competition
What can we do about it?
Of course this should have been addressed five years ago. Rather than look back, a group of forward thinking organisations including representatives from Government, payroll , providers and technical consultants have formed BIB. Chaired by Andy Agethangelou of the CIPP, Bib is an industry group focussed on creating a common data standard that can be adopted by all providers (including mastertrusts and insurers).
How is consensus being achieved?
Rather than compete with other standards (most notably Origo and the NEST standard), BIB have established a super-standard called PAPDIS. Origo and NEST now sit on the BIB committee and it’s hoped that the CDS – PAPDIS- will bring to it the insurers who back Origo and NEST- whose way of doing things could be adapted to conform with PAPDIS
Will it work?
It will work if the collaborative approach wins out over traditional competition. All providers currently believe that their interfaces are best, but the proliferation of “best ideas” leads to confusion and ultimately could lead to auto-enrolment being undermined.
The Friends of Auto-Enrolment (FofAE) is an organisation that has adopted PAPDIS as something it campaigns for. It is providing a platform for the disparate provider groupings to liaise with the various auto-enrolment stakeholders who include advisers, middle-ware suppliers and technology plays like Pension PlayPen.
The consensus that is behind the aims of FofAE (created by the same Andy Angethangelou) is impressive. The engagement and education that the group is bringing to what has hitherto been a dysfunctional industry is impressive.
Can BIB succeed where other attempts have failed? We will have to wait and see, but we don’t have long to wait to find out. The tsunami of employers staging auto-enrolment in 2015 is nearly upon us, 2016 and 2017 have the potential to swamp the pensions industry in what has been called a capacity crunch.
For PAPDIS to work, it needs to be built and adopted in short timeframes, by the end of Q1 2015.