Published by Julie Walker on
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Pension administration is high-volume and fast paced so automated processing has to be the norm.
Just this week I was asked this same question again in a more roundabout way by a group of trustees who wanted to know whether their administrators would still know ‘what was going on under the hood’ if the administration system was doing all the hard work.
Pension administration is high-volume and fast paced so automated processing has to be the norm - individual and bulk calculations, renewals, pension increases and payrolls should all be carried out using integrated administration software. All else being equal, automated calculation and processes are more accurate, efficient and cost effective. Trustees should expect their administrators to have automated processes in place and to be making the absolute best use of evolving technology to take the strain out of pension administration.
Coming at this from the other angle, what effect does automation have on pension administrators and their professional development?
Administration ‘lifers’ will remember the days when all calculations were manual and every day was an adventure in interpolation, revaluation and our old friend, equalisation. But what of the new generation of administrators coming into an already automated industry? Pension entitlements involve complex and layered benefit structures – ‘relevant legislation’ might be the position as it stood 40 years ago, so having a full understanding of current and historic scheme and regulatory processes is essential. Are we stripping out essential future skills in our drive for ‘push button processes’? And when automation fails, as it regularly and inevitably does, will anyone notice?
Pension entitlements involve complex and layered benefit structures... are we stripping out essential future skills in our drive for ‘push button processes’?
What will the industry be like in 20 years’ time? Will administrators understand the impact of the ‘A’ Day changes? The difference between Fixed, Limited and S148 revaluation? Why 1987 was ever a relevant date for AVC payers? Will Equivalent Pension Benefits be a distant memory? There will still be a huge pool of members with benefits affected by these issues, but if the administrators don’t have the relevant knowledge, will it just be question of pressing the button and hoping for the best?
We are all agreed that automation is here to stay, however automation doesn’t have to result in the automatic erosion of administration skills. Technology gives us tools but knowledge gives us power and there are many things that can be done to ensure that administrators build or retain their pension knowledge:
Today’s junior administrators are tomorrow’s team leaders. Today’s team leaders are tomorrow’s industry leaders. Pension administration doesn’t stand still. By focussing on education and development administration providers can guarantee that they have the right foundations to deliver quality administration while moving forward with constantly evolving legislation, technology and commercial realities.
This article previously appeared in Professional Pensions.