Spencer Lynch
For many pension schemes, the pension dashboard sits higher on the risk register than as something to look forward to. But if there were an “opportunity register”, I’d be putting the pension dashboard at the top of the list!
In a really good article in Pension Expert, Spencer Lynch of GBG explains how what seems to be a threat to schemes, can become an opportunity, with good data management. While firms like GBG have a vested interest in data cleansing, that shouldn’t be a barrier to our enjoying what Spencer has to say. I’ve read the article several times and am more than ever convinced that the next 24 months are going to open pensions to a mass market, as never before.
Here’s some of what Spencer’s got to say, you can read the full article here
The Pensions Regulator has ramped up its call to trustees to take action and prepare for the introduction of the pensions dashboard – recently launching its ‘Deadline’ campaign and guidance to get data ready. The largest schemes are expected to connect from June 2023 with medium-sized schemes set to follow from October 2024.
To many in the industry, the scale of the challenge can seem overwhelming. Indeed, it will be a huge undertaking with TPR’s own research showing that less than 10 per cent of schemes have begun to digitise the information they hold in preparation.
A lack of accurate member information is the elephant in the room here, fuelling delay and inaction — the loading of data onto the dashboard is not a job to be taken lightly when confidence in the accuracy, and the robustness of the data to be loaded, is lacking, throwing up additional concerns about data privacy, member identification and security.
According to the Association of British Insurers, there is currently £19.4bn in lost or unclaimed pensions in the UK. Many adults have three or more pension pots, and with more than 11 per cent of the population moving every year, job and name changes, missing members and deaths, deferred and legacy schemes, there is not only a big data clean-up and matching operation to be undertaken, but also a need be more aligned with General Data Protection Regulation’s ‘privacy by design’.
Pension fraud and scams are increasingly common and fraudsters will be looking to actively exploit any vulnerabilities in the build-up to the dashboard
There is a need to be proactive and preventative — not reactive or remedial.
Actions to take
It does not have to be this way. There is much that trustees can proactively do to get ‘dashboard ready’, better navigate and reduce the impact of these challenges.
The first step is to get a handle on the scale of the data challenge — how comprehensive and accurate is your data, and what steps do you need to take to not only get it up to date but to keep it up to date, and make it as broad as possible?
Audit and review your members. Which of them do you have email addresses and mobile numbers for, and can you engage with members to get this additional data or append it at a later date?
When you take into account that people tend to keep their email address for at least 10 years, the reduced degradation with this data means that trustees can better benefit from member engagement and fraud reduction via email and mobile channels.
Such engagement has been recognised as being one of the most cost-efficient ways of locating and engaging with gone-away members versus traditional tracing methods.
Member or fraudster?
The brewing fraud storm is another key reason to get ready. Pension fraud and scams are increasingly common, and fraudsters will be looking to actively exploit any vulnerabilities in the build-up to the dashboard.
TPR has said the fight against pension scams is one of its priorities, and trustees need to be extra vigilant that their members are who they say they are, and not open the door to fraudsters.
This is why data accuracy and the breadth of data need to be tackled first, so that trustees are not unintentionally providing information to the dashboard that could expose members to account takeover or pension liberation fraud.
The dashboard itself will help reduce fraud as it will drive members to a secure portal where the use of electric verification and biometrics to authenticate and verify the identity of members will be in place.
Many pension schemes and administrators have already gone down this route as it is much more secure than the use of ‘knowledge-based authentication’, providing a better member experience as documents can be provided digitally, removing the need to post them in.
A positive impact
When live, the dashboard will present one of three levels of matched members for every pension fund in the land: full match, no match or partial match. The last category is the biggest headache, and a proactive approach would be to engage with members now via digital channels.
There will be some trepidation from trustees, but the industry will be pushing against an open door, with members keen to engage remotely and access a ‘single member view’ of their assets.
