Are pension schemes doing enough to digitalise services and enhance member engagement?

With many businesses having to work remotely, Andrew Smith, Development Director looks at why pension schemes need to act now and move towards a truly digital-first position. 

In light of the current global health emergency, the need to expand services digitally, across all areas of pension administration, is now more critical than ever. Schemes need to move away from traditional administrative processing and enable members to self-serve online and perform instant transactions.

However, there are barriers. The need to see key certificates and paper forms, and collect wet signatures delays pension administration. Yet others in the Financial Services sector have managed to remove these time constraints and reap the benefits of faster processing, in terms of budget and resource savings. Mortgage applications can be completed in ten minutes using digital solutions, which include identity and verification services. 

There’s no reason why the pension industry can’t adopt the same digital first approach. Given current uncertainties, it’s crucial to make this change. At Civica we’ve removed the need for physical proof of identity when members self-serve their retirement online. In this paperless process members prove their identity digitally. By selecting their own retirement options there are less errors and administration resource is freed-up to focus on other work. Not only does this remove reliance on paper and postal services, it also means that administrators don’t need to be based in an office, both of these have a positive impact on schemes’ budgets. More importantly, a quicker, easier and more accessible service improves the member experience. 

In the banking sector organisations take customers on a digital-first journey. They’ve pushed the boundaries of digital engagement, whilst complying with stringent security requirements. Not all pension schemes have reached this level of digital transformation yet. They would do well to build on positive progress already made by others, making digital communication the norm. This is why our vision is for schemes to start online communication as soon as a member joins. Through our innovation lab, Civica NorthStar, we’re exploring new technologies to help schemes achieve this quickly. 

Alongside members, pension schemes should also enable employers to administer schemes digitally. This requires robust cloud applications that validate and process data files using the power of automation. When employers self-serve it significantly reduces the burden on pension funds, making resource available to focus on high value projects. Consequently, interaction with employers improves, enabling schemes to respond more quickly to member queries and ultimately provide a better customer experience. 

So what does the future look like for pension schemes in terms of digitalisation? 

It’s no surprise that cloud is critical to maintaining and improving services. As well as providing 24/7 services, cloud infrastructure allows administration teams to scale when needed and to work remotely; ensuring service delivery isn’t disrupted. 

Many schemes rely on central technical teams to keep systems functioning. As our economy tightens, that support may not always be available. Cloud software, managed by a third-party, removes the risk of pension departments being unsupported and makes the provision of that service the primary focus. Also with ever-increasing cyber security threats, cloud removes the need for a dedicated team to make sure the environment is secure.

Given that we expect administration teams to continue working from home for the foreseeable future, still facing the challenges of processing paper-based communications and performing tasks that could be automated, now more than ever it’s time to prioritise the use of secure cloud solutions. With firm cloud foundations in place, it will be much easier for schemes to adopt existing and emerging digital technologies that focus on delivering better outcomes for their scheme members.  

Andrew Smith

Development Director, Local Government, Pensions and Financials