Bringing pensions into the 21st century
My friend and pensions’ guru Henry Tapper wrote this last week in his daily, and very illuminating, blog. If you want to understand more about the pensions’ arena as a payroll professional I can recommend it as a read over your breakfast, as Henry manages to publish before most of us have stumbled out of bed!
I couldn’t agree more with what he says here. Some of the pensions’ industry, and they are well aware who they are, are still in the 19th century when it comes to IT solutions rather than the 21st. I have seen some truly mind-bogglingly clunky pension interfaces when I’ve been with clients this year. One insurer’s interface had 14 steps and took a day to upload 4,000 employees as every validation issue meant returning to step 1 – madness.
Value for money for employers is not just about how well a fund performs or how clear its annual statements are for members, it’s also about how easy it is for the sponsoring employer to engage. It stills feels too often that there is a sense of ‘if you want to do business with us then be prepared to use a slate and a pencil as we’re too important to change’. Well all I can say I hope employers in the private sector start to vote with their feet if that is the only way to get APIs embedded into payroll software so we can transmit the same format of file to every provider.
We were nearly there in 2012 with the PAPDIS standard, but NEST were allowed to go native and the rest is history – every provider with its own IT interface. In contrast, the payroll software industry, whether mature developers or new kids on the block, managed to deliver RTI to a standard API in 2013. This means employers choose payroll products based on other measures of functionality, safe in the knowledge that all will offer one RTI API within the product.
We need the pensions’ industry to understand we as employers (payroll professionals) are their customers, not just the members. I hope the dashboard is the spur to get the pension industry to deliver for members and sponsors. Here is the link to Henry’s blog for the full article, I’ve included an extract below:
When will pensions move out of the ‘paper age’?
Today the Pensions Bill will sit within the Queen’s speech and within the Pensions Bill will be proposed legislation to make it mandatory for pension schemes of all DC persuasions, to provide digital data to a pension dashboard. The timeframes are long- five years – these are not ambitious.
This week saw two radically different approaches to how our financial data is managed. The DWP issued a long consultation on a simpler pension statement which included sections on the colour of envelopes in which paper statements were delivered. The FCA produced, the following day, a Call for Input asking whether pensions data (inter alia) should be as “open” as our banking data.
It is clear that if we are to have digital pensions dashboards they will have to work in a system where data fills the dashboard templates in real time. For the majority of working-age adults, the production of digital banking statements are expected to be real time. Even if we are still getting information through a cash-point, we expect to see balances in real time.
The standards set by and for the pensions industry are still in the paper age?
Managing the transition
In all walks of life, we are getting used to not getting paper statements. Few people still get paper payslips, hardly anyone gets a paper bill from their broadband or mobile supplier. The transition to text or e-mail based statements has been brutal. While you can opt back in to paper, it is expected that you won’t and very few do.
We have successfully managed a transition away from paper comms in so much that I now feel embarrassed when I get statements from First Direct through my letterbox.
I am embarrassed and I’d happily move to getting all this information on the web, with texts as prompts for me to look at it.
I am also embarrassed because I know that I am part of a massive mailing operation which must have a considerable carbon footprint which I am contributing to. Digital is a greener way for me to get information.
It is very hard to argue for paper comms in banking and equally hard to justify paper comms in pensions.
The end of the paper statement
If I have a pension dashboard, I have links to those who supply the data and can use those links to request further information. The FCA’s Open Finance paper makes it quite clear that open finance extends to open pensions and that I should be able to access not just by pot value but my contribution history at the click of a key.
I should also be able to find out how much I paid for pension management and what value I got for the money that sits in my pot.
Gearing up for the time when I can use Open Pensions to manage my retirement plan, I hope shortly not only to see all my pensions in one place, but to have all the information that I need to manage my retirement plan, available to me from my dashboard.
I want so much more than pieces of paper, I want control of my financial affairs in later life and I want my management information on a single screen. I may be too frail to see it all on a phone, I may need a tablet or a larger screen, but I want my information clear, vivid and in real time.
The Paper statement is not the way forward, it is an anchor to the past. Even Q-codes are admissions of failure, when live links are the standard.
We must stop worrying about the colour of envelopes and aspire to digital journeys that take people where they want to go in as few clicks as possible.