Jo Cumbo has called out the “elephant in the room” as the data quality of the pension schemes that look after  our money , our data and our resources for security in retirement.

If data is money them money is data, if you get the one wrong , you get the other wrong. We should be as worried about our data being wrong as our account balances being wrong or our pension rights being wrong.

Jo is right, and she’s particularly right to call this now, because we are likely to have compulsory data disclosure through a pensions dashboard within the next five years meaning that if there are mistakes, those mistakes will be found out and people will rightly be very angry.

So what are we going to do about it?

Jo ends her piece with this warning

It is vital that member data is reliable as savers will use the dashboards to make decisions about their retirement plans. The regulator must now be tougher on scheme managers and trustees who do not take their record-keeping duties seriously.

If this particular elephant continues to be ignored it threatens to erupt into a major scandal that will come back to bite the industry in the form of costly complaints and fines.

The risks of poor data management ultimately revert to the data managers and this of course includes the Government’s own data managers who look after our various state pension schemes. The largest of these schemes is of course the state pension scheme which we are all a part of.

We know that worries about data quality have held up many pension providers for sharing the enthusiasm for pensions dashboards that consumers have shown. This is one of the reasons that the can is being kicked down the road. We should have had our dashboard this year (according to original promises made in 2016, now we are promised a dashboard in 2024, the delay is all about data readiness.

How do we get data ready?

This is one of the key questions that the dashboard working group and the governance team should be asking themselves. Real experts – people like Margaret Snowden – know very well that much data is digitally inaccessible – consigned to michro-fiche or worse- cardboard boxes.

Let’s praise the good

We must accept that some data is irredeemably lost to digital audit, but not all of it. Some schemes and providers have digital data going back into the last century and have made great efforts to store data to comply with data requests that might emanate from people seeing all their pensions in one place. Good for them – let’s make sure such schemes and providers are rewarded

Let’s chivvy the reluctant

I don’t see much energy being put into getting data ready for the dashboard right now, third party administrators appear to be adopting a wait and see approach, waiting to see just how urgent the problem is. This isn’t good enough (as Jo makes clear), if data is money then this is our money they aren’t sorting out and that’s not good enough.

We need to make it clear that data readiness for the pensions dashboard is now a priority and that means we need to be chivvying along the reluctant.

Let’s out the bad

I often wonder what good IGCs , GAAs and Trustees actually do. They seem incapable of whistle-blowing when they come accross bad practice, indeed they seem to be able to turn self-evident bad behaviours into good behaviours by adopting spurious benchmarks which anyone good beat.

Data quality isn’t easy to fudge, you either have quality data or you haven’t and it’s easy to test. We (AgeWage) have been testing hundreds of thousands of data items over the summer and reporting back to trustees , IGCs and providers where we find outliers that can’t be right. Most schemes have a few but some have a lot and where there are a lot, we point this out – discretely and politely. But we are firm – the outliers are probably a result of mistaken data. We have to see the bad outed.

Reporting on data readiness

Trustees and IGCs and GAA’s and providers can test their data in many ways but ultimately the data has to make sense in terms of people’s outcomes and if it doesn’t – it is probably in need of cleaning up, a process that needs to start now.

Where there is bad data, it is best to be clear about it. This is something that IGCs and GAAs could report on in their April 2020 statements and I hope that they will. Trustee chair statements come in at different times of the year and are harder to track, I hope that the Pensions Regulator will be looking hard at the effort of trustees to get dashboard ready

If fiduciaries aren’t prepared to “fess up” on their data quality and indicate their state of dashboard readiness, then maybe we need to think about compulsory data audits at annual intervals between now and 2024.

Such data audits could be conducted by firms like ITM who make data cleansing their job and they should be able to issue a data readiness certificate where they consider a scheme has clean enough data to meet the dashboard’s requirements.

If – as I hope happens, the dashboard starts with a low level requirement – perhaps no more than to confirm that someone has money or rights in their scheme, then a certificate of immediate readiness will be less onerous. But to really satisfy members and policyholders, I’d like to see insurers, SIPP managers and occupational schemes having a certificate of pension dashboard readiness that commits the scheme to full participation at the dashboard’s earliest request.

The principle of volunteering

Dr Chris Sier has long advocated a voluntary system of costs disclosure among pension funds, arguing that the moral pressure on those who don’t disclose will be more effective than the pressure of Government through regulation.

I agree with Chris and I think a voluntary approach to dashboard readiness could be adopted quickly and cheaply by schemes and providers who are comfortable in their skins right now. A declaration of being “dashboard ready” would allow Chris Curry and his team to consider that scheme or insurer as an early adopter – just as some schemes were early adopters of NEST, way before NEST was fully open.

Of course a Trustee or IGC could not declare a scheme or book dashboard ready without the agreement of the data provider, but if both were happy, then why shouldn’t good data managers get credit for being ahead of the curve and confident that they do the right thing by their members/policyholders?

Accountability is everything

Which would leave those who cannot issue a voluntary declaration of readiness in that awkward position of explaining to their “customers” why they can’t and more importantly when they think they could.

Schemes and books for whom the answer is “never” should make this plain up front. If there are major issues with data loss or corruption then it’s up to fiduciaries to confess this has happened and put themselves in special measures.

Accountability is everything, the dad should be outed, the reluctant chivvied and the good rewarded. Without a plan to do this, the pensions dashboard will continue to drift as it has for the past four years.

With a proper system of accountability,  I reckon that not just a dashboard – but overall confidence in our pensions – will be greatly enhanced within the next five years.