A pensions administration professional’s perspective
In pensions administration, precision is paramount; errors can have a significant impact on someone’s post-retirement life. In the battle to mitigate and reduce errors, the role of quality assurance (QA) cannot be overstated.
As a senior pensions administrator who has worked for several of the leading administration providers, I have experienced firsthand the positive impact that QA has.
Mistakes can happen in anything that we do; they are an inevitable part of life. In the pensions world, they can arise through errors in numbers or in the way that we present and communicate information. They can be genuine errors or misinterpretations of data and information held on our administration systems. Some, due to poor or incomplete data, may be outside of the administrators’ control while others arise from individual or systemic issues within pension systems and processes.
Scheme administrators strive to get things right first time and work hard with their members and stakeholders to put things right when they go wrong. In the vast majority of cases, administrators provide good, clear and accurate information to their members. Very little is ever said about the considerable number of transactions and interactions that members have with their pension providers every day where things go right.
However, when an error arises, for whatever reason, dealing with the fallout and rectifying the error can take effort, resources and time that administrators could spend focusing on other things. Reviewing quality control processes and mechanisms regularly can reduce risk and help to minimise errors recurring in the future.
What is quality assurance?
QA is a systematic process of verifying and validating the accuracy and reliability of calculations, administrative processes and the member communications that go with them.
It acts as a safeguard, ensuring that calculations, communications and scheme processes are precise, compliant, and transparent, promoting trust amongst members, trustees and wider stakeholders alike.
QA encompasses a range of activities. This can range from reviewing individual calculations before issue (including the end-to-end calculation process from the receipt of data to the member communication) to auditing entire systems and processes on a regular basis.
The ultimate goal is to identify and rectify errors before they reach scheme members.
What are some of the benefits of undertaking quality assurance activities?
- Accuracy and compliance: A primary benefit is minimising the risk of pension calculations and administrative processes failing to adhere to legal and regulatory standards. Non-compliance can result in significant financial, reputational and other implications for both the scheme and its members. QA supports compliance and reduces the likelihood of costly penalties and rework.
- Error reduction: Even minor errors if not corrected can lead to significant discrepancies over time. QA can help to identify and correct errors early, reducing the risk of members receiving erroneous financial information and ensuring that they receive their correct entitlements.
- Enhanced trust and transparency: A cornerstone of any pension scheme, members must trust that administrators provide timely and accurate information to ensure that they engage with the scheme positively. Robust QA processes allow administrators to demonstrate their commitment to transparency and accountability. This builds confidence among members, who rely on the scheme for their future financial security.
- Operational efficiency: While QA may appear to be additional work, it actually enhances operational efficiency. By catching errors early, schemes could potentially reduce the number of complaints that they receive as well as reduce the need for time-consuming corrections and rework. This efficiency translates into cost savings and allows administrators to focus on other things such as BAU, scheme improvement and member engagement.
- Continuous improvement: QA should be an ongoing process of regular audits and reviews, gaining valuable insights into areas for future improvement through identifying and understanding errors and why they have occurred. Administrators can then refine their processes and systems continuously and highlight areas where a different approach could be taken to mitigate risk and reduce errors. Adopting a culture of continuous improvement can also ensure that the scheme remains resilient and adaptable to changing regulations and member needs.
How can schemes implement effective quality assurance?
Implementing effective QA involves establishing systematic processes to ensure that all aspects of the scheme meet predefined quality standards.
Some key strategies that schemes can follow to implement are:
- carry out robust reviews of individual calculations prior to issuing quotations to members
- conduct regular scheme level audits of calculations (automated and manual) and processes to ensure compliance and accuracy
- leverage technology and software solutions to automate and streamline calculation, communication generation and QA processes, to improve calculation efficiency and reduce the likelihood of error
- invest in training and development of staff to keep them updated on the latest regulations and best practices
- establish strong feedback mechanisms to capture members and other stakeholder feedback and use this information to drive future improvements
- learn from past mistakes. Implement robust reporting procedures to identify improvements and encourage an open and transparent environment where errors (and near misses) are examined blame free so that administrators feel safe and encouraged to speak up when errors are identified
- learn from other schemes by having open discussions about their QA processes, past issues and mitigation strategies. Use their insights to develop your own stronger QA strategies
Conclusion
Quality assurance is not about ticking boxes; it is about safeguarding the future of scheme members and ensuring the integrity of the pension scheme. As we continue to navigate an ever-evolving regulatory landscape, the role of QA becomes more critical.
Pensions professionals are committed to ensuring that members receive the right benefits at the right time, first time, every time. By championing and prioritising QA within our individual schemes we can continue to build robust, trustworthy, and efficient pension systems that stand the test of time and foster a culture of excellence across our industry.
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.