Good quality data is the bedrock of pensions administration.
Not only is the accuracy of benefits paid dependent on it the effects of data quality impact all aspects of pensions administration. Almost every process relies on data in some way. Where data is unreliable or incorrect, the additional governance and corrective action required consumes effort every time that process is carried out. Poor data costs time, can lead to fines and other measures being taken against the scheme, impedes innovation and reduces confidence in the scheme. Pension administration data sits at the heart of the industry and valuation results are questionable if the data is flawed. The cost of getting it right is far outweighed by the risk and cost impact of ignoring the issue.
Most of the data that sits in a member’s pension record comes from an employer's payroll or HR system. Getting data from one database to another should be simple. For many pension schemes it is, as there is a direct one to one relationship between the scheme and the employer; unfortunately, this isn’t the case for public service pension schemes where the number of participating employers in the pension scheme can run into the hundreds and thousands.
Given the impact that technology has on our day-to-day life, it may come as a surprise that pensions administration still relies on pen, paper and the Post Office to get data from an employer's payroll system to the pension system. With this in mind, it is perhaps of no surprise that the Pension Regulator is taking an interest, with the view that a monthly electronic submission should be the default for pension returns, with employers providing timely and accurate data, 90% of the time.
Automating the process improves operational efficiencies, reduces the risk of financial penalties, increases speed, and reduces costs – making sense for everyone. The real benefit of data automation to employers is that it will simplify the existing process that is needed to meet their obligations to their employees and the pension schemes, with tasks completed quickly.
Several LGPS funds and their employers have turned to a digital service to automate employee pension returns, moving away from a once a year exchange of data to monthly submissions.
i-Connect simplifies monthly data submissions to pension schemes for employers, relieves pressure on stretched resource, and reduces risk, cost and inaccuracies. The software is about exchanging data between payroll and pension forms and getting data from one place to another.
As of today, i-Connect is being used by 48 LGPS funds and 4,000 employers for their 600,000 employees, with over 22m pieces of data processed each year. 94.54% of submissions are being made on time with an accuracy rate of 99.61%, with the employers typically seeing a 90% reduction in effort in providing the data.
Automated monthly data returns will become the norm in the next few years. Monthly data collection will enable the employers to provide the scheme with timely, accurate and complete data and provide both process and operational efficiencies by: