Alan Clay: Getting the fundamentals right is essential to build resilience and secure the best terms for members
Persistent issues with scheme data remain, despite increased industry awareness, posing a barrier to endgame, a LexisNexis® Risk Solutions report says.
The data analytics firm's report – The dangers of bad data on the journey to buyout – examined how data-related challenges are impacting pension scheme resilience, endgame outcomes, and the journey to buyout.
It said that, while schemes are set to benefit from improved endgame options, barriers remain in place – particularly when it comes to data.
And it added that, as the volume of transactions coming to market had increased significantly, the shifting balance of supply and demand means insurers can be more selective, intensifying competition among schemes.
As a result, it said the onus is now "firmly on trustees" to ensure their data is fit for purpose.
A survey of over 100 pension scheme professionals, conducted by Professional Pensions in association with LexisNexis® Risk Solutions, found that "scheme overconfidence is rife" – noting that, while most respondents believed their schemes' data to be in a good position, with an average score of 8.3 (out of ten) for completeness and 8.2 for accuracy, contradictions emerged elsewhere in the survey.
Common concerns cited also included low member engagement and high instances of returned post.
The research also found that data posed a real cost and barrier to endgame – adding that, among the barriers cited by firms to improving data quality, were uncertainty around the level of upfront investment required. This issue ranked highly for almost a third (31%) of respondents, with 16% citing a lack of internal capability.
LexisNexis® Risk Solutions data strategy director Alan Clay said: "Clean, accurate and regularly maintained data not only has the potential to improve a scheme's position for buyout but it can also reduce fraud risk and even improve outcomes for members along the way.
"Yet, the data-related challenges highlighted in this report echo some of those we identified in research previously carried out with Professional Pensions in 2021 – revealing how persistent issues remain, despite increased industry awareness. Getting the fundamentals right – correcting errors at source, using complete information, and keeping records up to date through regular screening – is essential to build resilience and secure the best terms for members."
