How to improve your Common Data score and make cost savings in the long term
Hannah Jarvis 9th January, 2019
Why should you undertake a tracing project?
Undertaking a tracing project to screen your data can seem an unnerving prospect initially, however, fully understanding the quality of your data is the first step towards improving it. It is important to understand that there are a few main reasons why the data you hold on file may be inaccurate:
Historical or inherited data Multiple company acquisitions over several years and the associated transference of the data between organisations can result in piecemeal information that is potentially out of date, full of inherited inaccuracies or historical transcription errors.
Residents moving within the UK
In a recent article published by The Independent, the number of UK home-movers is at a 10-year high, with more than 370,300 households moving; this is being fuelled by low mortgage rates and high demand for homes. [1] Even if you have received correspondence from a member 12 months ago, it is entirely possible that they could have moved address within that time.
UK Residents emigrating
Members who have left the UK and emigrated to another country can continue to move addresses whilst abroad or may even pass away overseas. It is notoriously difficult to keep track of pension members who have emigrated, and formatting of overseas addresses is another common area of data inaccuracy. The most recent study from the Office of National Statistics since the EU referendum vote in 2016 shows a decrease in the number of people coming to live in the UK and an increase in the number leaving.[2]
The factors outlined above affect the data held by all pension schemes in some form or another. Depending on the nature of your pension scheme and the demographic of your members, the extent to which these factors will affect your data is varied and can only be measured via an initial screening.
Apprehension around data screening is completely normal, as the results are always somewhat of an unknown entity. It is understandable that busy administration teams who are already under a huge amount of pressure to meet numerous data requirements and obligations may be tempted to put off a large-scale tracing project, however, due to new requirements around Common Data which have been outlined by the Pensions Regulator this is no longer acceptable:
“Where record-keeping problems are so severe as to indicate a failure to maintain adequate internal controls, resulting in a failure to administer the scheme in accordance with the scheme rules and the broader requirements of the law, these schemes will be prime candidates for investigation. We wish to emphasise that simply measuring the presence or absence of data doesn’t provide any evidence that the data is accurate. Trustees and providers need to be conscious of this, and they should reassure themselves that they have controls in place to ensure the accuracy of their data, as well as checking that the data exists.” [3]
Despite seeming like another expensive, regulatory hoop to jump through, an in-depth tracing exercise improves data quality, meets regulations, and demonstrates a commitment and responsibility to your pension members.
What does tracing/screening usually look like?
The first stage of a tracing project usually involves an initial screening of the Common Data Fields against a variety of data sources, providing preliminary results which can indicate areas of concern, or flag further action which needs to be taken. Preliminary results can flag potentially deceased members or members who have moved from the original address held on file. From these results, the scheme can make decisions on which payments to suspend (where members have passed away), which records may need further tracing to identify current contact details and which records have been confirmed to be correct and require no further action. Your organisation may have had a rough idea of data quality from returned letters in the post, however this is never a true reflection of the actual picture. Screening allows you to identify these areas of concern and take further action to improve them.
What do you do next?
Once the preliminary screening results have been returned, a true picture of your data quality is provided and a plan of action for each area of concern can be taken.
- Potentially Deceased Members
Where deceased members are detected, instant liability cost savings can be identified, which in many cases can cover a lot of the cost of the initial tracing work – these cases should be fully investigated.
- Members who have moved
Automated tracing: There are now several companies who provide automated tracing to offer new addresses for your members. Automated tracing is a low-cost solution to find those easy-win cases; due to the automated nature of this method however, it does not find all members, and it may from time to time, provide you with the wrong result (e.g. 1,262 John Smiths were born in 1950). Schemes must also take into account that each result will need to be fully verified.
Research-led tracing: Employing a team of experienced researchers to track down your “Goneaway” members is an all-encompassing way to resolve your cases as fully as possible. Researchers use a variety of tools and techniques ranging from electoral registers, genealogical tracing of family members who may be able to assist and open source research across various platforms. The advantage of research-led tracing is that you can be confident of the results; as typically, this includes confirmation or verification with the actual members themselves through correspondence. Research-led tracing is the only method which can identify deaths overseas, confirm accurate overseas addresses and find those impossible members through an investigative, holistic and creative approach to tracing which an automated solution just cannot match.
Why tracing members can reduce scheme liabilities:
Below is a typical example of why research-led tracing also supports liability reduction:
A member is born David William Cooke on 08/06/1948.
During his teens David preferred to use his middle name instead of his forename so was known as William, or even Billy Cooke. He used this name through employment and this was the one his pension scheme had. Mr Cooke started to receive his pension in 2003 and at the time gave his address to the pension scheme. During 2004 the scheme was taken over by a new organisation, and all pension data got transferred. When this happened there was a technical issue and some dates of birth got transposed, so Mr Cooke’s date of birth became 06/08/1948. Towards the end of Mr Cooke’s life, he had moved twice too.
Mr Cooke died in 2011 in a nursing home near his daughter’s house 180 miles away from the address held by the pension scheme, his death is registered in his birth name. As part of the death screen this case is highly unlikely to be picked up, because the forename is now different, the day and month of birth are different, and the area of death is 180 miles away from the address held.
The one saving grace is that Mr Cooke was not appearing to be a resident at the address held and a red flag was raised. This example is hypothetical, but not uncommon, we see many other examples like this all the time, including instances where people move and die abroad.
Due to inevitable human complexities such as those portrayed in the above example, and the varying possible paths of an individual’s life, research-led tracing using experienced and professional researchers can sometimes be the only way in which a member can be found. Mr Cooke would not have been flagged as “Goneaway” had the initial screening not been carried out, nor would the resolution of his pension have been possible without research-led tracing to solve the problem. The suspension of his pension payments would have resulted in beneficial liability cost savings and an improvement in data quality.
The results of successful tracing projects and the benefits for your scheme in the long run:
Although embarking on a tracing project can be costly in the beginning, the long-term benefits far outweigh these initial drawbacks:
Confidence in the data
Tracing provides a true picture of data quality and the inherent value in the event that a scheme may need to prepare itself for a transaction (buy-out for example).
Liability Cost Savings and Fraud Detection
A detailed review of your data ensures that no stone is left unturned with the potential to overpay deceased members minimised.
Common Data score
Tracing is likely to increase your Common Data Score to a level which exceeds the requirements of the Pensions Regulator. Schemes can have confidence when reporting their scores annually.
New forms of communication
Re-contacting members can provide a chance for schemes to encourage new forms of communication with their members, such as online platforms, which can alleviate a lot of problems with changes of address in the future.
Pension Member confidence
Tracing your members, ensuring their details are correct and re-contacting them demonstrates a commitment to them, and shows that you are proactive in your responsibility to them, as a scheme.
The Tracing Group provide a range of solutions to support schemes in their data improvement, please get in touch today for more information.