Kim Gubler says it is time that schemes and administrators reassess SLAs and look at what real people need from their pension schemes and when
Working in the pensions industry we're always talking about members. But, realistically, how many of us can honestly say we always think of them as people when carrying out our day to day work? Clearly, we know members are people, after all (I hope!) we're all members too. However, we mustn't become so caught up in the big picture that we lose sight of how what we do impacts real people with real needs, hopes and dreams - just like us.
Service level agreements (SLAs) are a key component in the arrangements between administrators and trustees and have a long-standing place in trustees' oversight and governance. Often SLA slippage is only considered a problem when it falls far below target. But do we genuinely appreciate almost everything we do has an impact on individual people? When we talk about SLAs being ‘good' at 96%, do we really think about what the impact was on the 4% of people whose questions weren't answered in time, whose benefits were paid late or whose transfers took longer than they should have?
It's therefore important trustees are looking closely at what their SLAs actually represent. While it's to be commended some administrators are committing to turnaround times of two days or less for all member interactions, few will contractually commit to such short timescales. Who wrote the rules to say 10 days was the right amount of time to give someone a statement of benefit on leaving, or reply to correspondence? These timescales were designed when email was in its infancy and paper was king. If you needed something dealt with quickly, there was always the fax! It's time we looked at what SLAs mean to real people, what they need from their pension schemes and when. Not what's easy or convenient for us to give them.
We live in a world of instant access to information, which is filtering through for members of defined contribution (DC) schemes. Here it is apps, not websites, which are starting to become the norm. Apps allow people to interact, engage and take action through their mobile phones. But if peoples' pension financials can be transacted through an app, if they can interrogate their pension savings, model their benefits and use ‘what if' tools - what good is an SLA to trustees in the oversight of their DC administrator? These trustees will need a clearer picture of whether the pension scheme is delivering what people need. This may involve a greater focus on tools that track how people save to help them put more away, or spending time looking at the real cost of investment and more suitable and individualised default funds. Perhaps what they should be doing is finding out what people value when they're members of DC schemes and tracking this as a measure of performance?
Sadly, for members of defined benefit schemes, complete online access is not the norm. Many are lucky if they get a benefit quote in 10 days. There are lots of reasons why DB members can't interact with their pensions online but, across the board, the main one is poor data. If an administrator must gather data from different sources, calculate benefits ‘off system', input the results into a letter and then get it all checked - this slows everything down. It's hardly surprising a quote can take 10 days. The dashboard will eventually change this, but that will take time. If DB trustees want their schemes to deliver whatpeople need, data quality must be addressed as a priority. Then there'll be no reason for DB people to receive a lower service than DC people and no reason to have a 10-day SLA.
We are 19 years into the 21st Century, is it time for SLAs to come of age?
Kim Gubler is chairwoman of the Pensions Administration Standards Association (PASA) and director of KGC Associates
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