The quality and security of data is critical within the life and pensions industry. Failure to maintain and continually improve data quality has significant, quantifiable costs and risks. Two important areas pension schemes should target to reduce costs and risks are:
- Pension payments to deceased members
- Incorrect or missing data
Consider the following facts:
- IOD (Impersonation of the Deceased) identity fraud is one of the fastest growing forms of ID fraud in the UK.
- It is estimated that over £200 million per annum is mistakenly being paid by UK pension funds to deceased pensioners.
- Deferred mortalities may remain undetected for years; screening across these members means a scheme's liabilities can be more accurately calculated and, where applicable, spouses' and dependants' pensions brought into payment.
- Keeping in touch with deferred members is becoming increasingly important, as vital communications regarding potential scheme wind-ups are necessary.
- Correspondence, including deferred benefit statements, is an important part of providing a good pension administration service to deferred members.
- According to Royal Mail estimates, up to 10% of consumer mailings fail to reach the intended recipient because of the natural decay of data and data hygiene issues.
- To exhibit good governance Trustees should already be mindful of the quality of their data. Section 249a of the Pensions Act 2004 requires 'trustees and providers to establish and operate internal controls that are adequate to ensure that the scheme is administered and managed in line with the scheme rules and the requirements of law.'
Increased data quality will reduce the number of certificate of existence exercises and could eliminate difficult cases of obtaining refunds from bereaved families.