In 2006, British mathematician, and architect of Tesco's Clubcard, Clive Humby OBE famously remarked that "data is the new oil”. This analogy reflects the immense value and potential that data holds. Just as oil transformed the industries and economies of old, data has done so in the 21st century. However, like oil, data's true value is only realised when it is refined and properly managed.
Data on its own is just a collection of numbers and facts. It must be processed, analysed, and strategically utilised to unlock its true value. This transformation from raw data to valuable insights necessitates a robust data strategy, akin to the refining process for oil.
This is particularly pertinent in the realm of pension schemes, where data has the potential to significantly enhance operational efficiency and member engagement. Its mismanagement on the other hand can be destructive to decision-making and member outcomes.
We all know pension schemes hold a huge amount of data. With that comes risk, and we need strong governance structures to control its usage and ensure its security. However, we shouldn’t shy away from the potential rewards: How data can be used to provide insight and achieve scheme managers’ ambitions.
The role of data strategies for pension schemes
For pension schemes, a well-crafted data strategy is crucial. It serves as a roadmap for harnessing the potential of data, guiding organisations in achieving their goals while ensuring compliance with regulatory requirements.
The first step in any data strategy is to establish clear, achievable, and even aspirational goals. These goals provide direction and purpose. They could be tied to:
- Ensuring compliance: Pension schemes must adhere to stringent regulatory requirements regarding data protection and privacy. A comprehensive data strategy ensures that these obligations are met, safeguarding both the organisation and its members.
- Enhancing member experience: In today's digital age, members expect seamless, personalised experiences. By leveraging data, pension schemes can tailor their services to meet individual needs, enhancing member satisfaction and loyalty.
- Optimising operational efficiency: Not all enhancements need to be digital; they can also be tangible operational improvements that cut turnaround times for non-digital users, lessen the pressures placed on administrative teams and reduce the cost of delivery.
Common pitfalls in data strategies
While the potential of data is immense, realising it is fraught with challenges. Common pitfalls in data strategies include:
- Lack of clarity: Building on the above, without clear goals, data initiatives can become unfocused and ineffective. Regular reflection and adaptation are essential to maintain alignment with organisational objectives.
- Data silos: Data trapped in silos limits its utility. Breaking down these barriers and fostering a culture of collaboration, within both systems and teams, is crucial for maximising the potential of data.
- Overlooking data quality: Poor data quality can undermine even the best strategies. Historically, pension schemes have grappled with data quality issues. Inaccurate or incomplete data can lead to significant challenges, from miscalculations in member benefits to compliance breaches. As automated services become more prevalent, the need for high-quality data has never been more critical.
Improving data: a step-by-step approach
Improving data quality is a continuous process that requires commitment and strategic planning.
Here are some steps a pension scheme can take:
- Identify deficiencies: Conduct a thorough audit to identify areas where data quality is lacking. This might include missing information, outdated records, or inconsistencies. Don’t just focus on data that is already held, also be aware of the quality of new data and how this can be improved. What validations do you apply to data throughout the member journey, from when data is first received to when members retire and take benefits?
- Develop a plan: Once deficiencies are identified, develop a strategy to address them. This might involve implementing new data management tools, training staff, or revising data collection processes.
- Monitor progress: Regularly monitor progress to ensure that not only are improvements being made but that they are driving expected outcomes. This can involve setting benchmarks and conducting periodic reviews.
The transformative power of pensions dashboards
One of the most promising developments in the pension industry is the advent of pensions dashboards. These digital platforms have the potential to revolutionise member engagement, providing a user-friendly interface that simplifies complex information. By offering members a comprehensive view of their pension savings, they can help members understand their financial situation and plan for the future with confidence. For these dashboards to be effective, however, the underlying data must be accurate and up to date.
Pensions dashboards promise to shift the power dynamic in data management. They will provide members with real-time access to their pension data, encouraging self-cleansing which could potentially lead to cost savings for schemes. However, this shift requires schemes to adapt their operational processes to handle new challenges, such as partial matches and value data requests.
Member expectations are also set to rise with the introduction of pensions dashboards. Schemes must ensure their digital offerings meet these expectations and provide additional value beyond the minimum dashboard requirements.
Revisiting data strategies
As the digital landscape evolves, pension schemes must continually revisit their data strategies to ensure they remain relevant and effective.
This involves:
- Engaging with administrators: Collaboration with administrators is crucial for effective data management. By working together, organisations can ensure that resources are aligned and that data initiatives are supported at all levels.
- Conducting regular audits: Periodic data audits can help identify new opportunities and challenges, ensuring that data strategies are aligned with organisational goals. Remember that there are many different lenses through which data quality can be viewed. Independent experts like GAD can work with administrators to benchmark the current position, capture past practice, and provide valued insights to support improvements.
- Adapting to new technologies: As new technologies emerge; pension schemes must be prepared to adapt. This might involve integrating artificial intelligence, machine learning, or other innovations into their data strategies.
Summary
By developing robust data strategies, improving data quality, and embracing innovations like pensions dashboards, pension schemes can unlock the full potential of their data. This not only enhances operational efficiency and compliance but also transforms the member experience, paving the way for a more informed and engaged membership.
As the digital landscape continues to evolve, the importance of data will only grow, making it an essential asset for the future of the pension industry.
Don't be discouraged; concentrate on the improvements that quality data can deliver!
Disclaimer
The views expressed are the author’s own and the opinions in this blog post are not intended to provide specific advice. For our full disclaimer, please see the About this blog page.