Whilst I have been working in financial services for over 20 years, when I became Managing Director of Origo at the beginning of this year, one of the first things I did was to tour the industry to get a fresh perspective and hear what various stakeholders believe is important for the industry and the UK consumer.
What was extremely encouraging to see was the focus on customers/members and helping them achieve good outcomes. What I was somewhat surprised to learn, however, was how a number of key processes are still subject to manual processing.
Given the functionality and capabilities that lie within the phones we all carry around in our pockets, and how fast and easy online access to bank accounts are forming consumers’ expectations of what is the norm, for pensions administration processes to be carried out using paper-based systems mixed with large, complex spreadsheets seems incongruous to the way we now live our lives and run our businesses. Add to this the fact that pension provider systems and processes are increasingly under greater scrutiny by Government, which is very much focused on the consumer experience, and there is a clear need for change.
There are numerous reasons why processes are lagging technology: time, resource and money sum up the key ones.
All companies, no matter how large, have finite amounts of each, and the considerable amount of legislation and regulation with which the pension industry has had to deal with over the past few years have focused priorities. Add to that mix the legacy systems companies have acquired over the years, along with the need to make a business case for improving back-office administration against more pressing issues, and it is understandable that in some areas industry processes have fallen behind the available technology.
So, how do we address this? Let’s take as an example bulk pension transfers; the transferring of a pension scheme’s members (in full or part), from one provider or administrator to another.
To carry out a bulk transfer, considerable data and information on payments and entitlements has to be collated, monitored, and passed between the ceding and receiving parties.
When using manual paperbased transfer processes, they are open to a range of disadvantages:
+ Delays in the sending and receiving of data by organisations and the member
+ Issues around accuracy of transfer information, as changes continue to occur during the transfer process
+ Formatting errors
+ Delays and costs of manually updating information
+ Keying errors
+ Communication breakdowns between scheme and providers
+ Contacting and dealing with the ‘right’ contacts at counterparties to progress the transfer
+ Data transfer issues
+ Data security issues
+ Out-of-market issues.
Automating bulk transfers enables processes to be better controlled and the majority of the issues listed above to be resolved. Most importantly, it can also lower costs as well as the risks for all parties, particularly the scheme members.
Automating the bulk transfers process enables faster switching between ceding and receiving parties and can deliver:
+ Faster, member-centric service
+ Transparent, trackable process
+ Secure and reliable transfer and communications between transferring parties
+ Consistency and integrity of data (as all transfer parties work from the same data)
+ Savings for providers and administrators in terms of time and money
+ Common approach across the industry
+ Significantly reduced costs per transfer as well as overall costs
+ Better member outcomes.
It also helps employers to save considerable time and resource commitment.
How it works
Origo has been operating a bulk transfers service since 2015. This is how it works.
First, a trust framework is signed up to by transferring counterparties, with each party aware of its obligations and rights. This framework enables the receiving party (for contractbased schemes), to collect consent from each member on behalf of the ceding party at the point of application.
This does away with paperwork inefficiencies which occur between organisations and individuals, ultimately slowing down the transfer.
This framework is the open Common Declaration Standard now managed by Criterion. The system defines, and all parties agree, ahead of any transfer, the information that is absolutely critical and common to effect the transfer. This removes any uncertainty and confusion, and saves administrator time.
Formatted CSV files are then uploaded to Options Transfers, a secure online service, avoiding data security risks that emailing CSV files can cause, critical under GDPR.
Changes and updates to the information can then be conducted through one secure point by each transferring counterparty. This avoids confusion as to which file, or information about a particular member or even an entire scheme, is the latest and most up-to-date. The changes are recorded for future auditing purposes, as well as being automatically notified to the other transferring party, with any action required in order to progress the transfer quickly flagged. Another advantage of using a secure bulk transfers hub is that contact information of the teams and individuals responsible for administering the transfer can be added, speeding up relevant communications. For example, notes can be sent securely, helping to ensure all transferring parties are kept abreast of any anomalies in an efficient and fully auditable way.
Finally, automation includes secure, automated monitoring and co-ordination, as well as prompting of actions, and full MI and audit trail for review and compliance requirements.
There are some very clear wins here. The scheme member experiences a safer, faster, customer-focused service. The schemes and administrators have a faster, less labourintensive and therefore less expensive process, with a significantly reduced possibility of error, and which is trackable and auditable.
This means that not only is the process more efficient and cost effective, but providers can better communicate with the member where they are in the process. For the new scheme taking on the business, that level of service and member attention can help cement the member’s confidence that the switch is in their best interests.
By providing a better service to members, automating bulk transfers also gives a clear message from the industry to Government around improving the consumer experience, as well as enhancing individual companies’ reputations in the industry.
And this is just one of the reasons that I joined Origo – to be at the forefront of positive change in the industry.
By automating transfers through Origo’s Options Bulk Transfers service, we are able to help the schemes, trustees, and administrators to create greater efficiencies, reduce their costs, and deliver better outcomes for members. I see that as a very positive step in the right direction for all concerned.