Heywood Pension Tech
Embracing digital administration will allow schemes to adopt and exploit other new technologies that will help to reduce costs while improving levels of service.
In part six of our Digital Admin series, we look to the future and to the next generation of technology, and the technology that will support the digital administration of pension schemes in the years to come.
Technology: The next generation
During our research, several schemes said they were interested in how technology such as robotic process automation (RPA) might be applied within pensions admin.
Unlike most ‘cost savings’, this is not so much about replacing people working in administration, but rather filling the gaps that already exist in an industry which is failing to replace skilled workers as older admin experts retire.
Schemes hope to use RPA to free up some administrators to focus on more complex aspects of the administration process, while leaving the bulk of the number crunching to the machines.
How will AI help digital admin?
Jim Woodlingfield, deputy head of service delivery at Surrey County Council was one of those who was interested in looking at the use of artificial intelligence (AI). He sees an opportunity for it to be used to engage with savers using natural language programming and replacing more text-based chat bots.
But there are two other, more powerful applications. The first is to use AI to improve the saver experience by rendering personalisation via video reports and annual statements that will take a generic video template but populate it with just the information for a particular saver.
The other is operational, where AI might be used to turn over in the background as a kind of early warning system.
It would not, he says, replace spot checking, but it might identify trends that are not apparent to administrators until much later.
Russell Whitmore, head of administration, Evolve Pensions: “You could run chat bots with AI and that could take a lot of the heavy lifting out of the first contact with members. This would take pressure off head count and be used to help people self serve.”
Stephanie Nuttall, head of pensions operations, Lloyds Bank thinks AI could take that further to address the advice gap and offer something like true robot advice or guidance.
“That's a great area of potential because people have more choices than ever before now, but they don't feel equipped to make those choices or to manage their own pension affairs, which is fair enough.
We don't get taught this stuff, so finding a way that is not training 50,000 new IFAs to plug that gap I think is one of the biggest things that we can do for savers as an industry and that's got to be an area where technology could really support us.”
Digital admin will allow new technologies such as RPA and AI to be adopted. These might be used to improve processing efficiency and support savers through most queries, leaving the already stretched human administrators to oversee more complex arrangements.
Machine, teach the next generation…
Another senior scheme manager sees great potential for using AI to not only backfill the gap in the admin market, but use it to educate a new generation of administrators.
“Beyond the obvious benefits for servicing the members experience, we still need people that can administer those schemes.
“So why not adopt AI for training purposes rather than relying on existing senior staff to try and train joiners while overseeing the rest of the business?”
One senior scheme manager was very keen on how technology could not only identify and quantify emerging risks, but help frame the concerns about cost within a broader context.
“If we start now, we know there is a cost, but it's likely to be worse later down the line if we have to react rather than act proactively.
“There will always going to be restrictions and discussions around costs – and everyone wants to keep costs as low as they can – to protect the funding position of the scheme.
“But I do think that that cost isn't looked at in isolation and it is seen as part of a bigger piece.
I think there is an understanding that everything comes with a cost, but why don’t we assess the benefits are around that to understand how this could help us in the future. Possibly, even, by lowering costs.”
The role of new technologies in digital admin
Technology like AI may not just revolutionise processing, but could be put to work teaching the next generation of pensions administrators, freeing the time of senior administrators, many of whom are close to their own retirement.
RPA and AI could greatly improve the accuracy and security of pensions admin and improve the saver experience. Many pensions professionals believe these technologies should be used to address the structural weaknesses that are currently holding back the pace of change. These weaknesses include the need for administrators to manually intervene in many processes; to take up basic administration to release administrators for more technical tasks and to combat the general shortage of administrators by using AI rather than senior professionals to assist in training of the new generation.
This article is part six of a series that analyses the survey findings and the current position of digital pension administration in the UK. The full whitepaper is available to view here.
Read Part One - Digital pension administration in 2024 - where are we at?
Read Part Two - Digital pension administration in 2024 - ambition v progress
Read Part Three - Digital pension administration in 2024 - what the industry experts say
Read Part Four - Digital pension administration in 2024 – the factors influencing adoption
Read Part Five - Digital pension administration in 2024 - invisible threats
