Spence & Partners, the UK pensions actuaries and administration specialists, today commented that the recent news surrounding the availability of real-time valuations is a welcome step towards the delivery of a more pro-active service to pension scheme trustees and sponsoring employers, but that progress will be hindered if the link with scheme data and an audited benefit specification isn’t strengthened.
Marian Elliott, Head of Trustee Advisory Services at Spence, commented: “The facility to undertake daily valuations and become more responsive around the scheme’s funding position will certainly benefit trustees and sponsors in the management of legacy defined benefit schemes. It is absolutely right that trustees should expect to receive real time liability information. This is something we have been doing with our clients for a few months now and they have responded very positively to the streamlining of the process. We are therefore pleased to see the development of other such services being announced in the industry.
“However, unless high quality data can also be provided in real time, then you aren’t fully addressing inefficiencies and the potential for error – and you are also likely to be adding a layer of cost. For maximum accuracy and efficiency to be achieved, the data should be fully audited and immediately accessible, rather than collated on a quarterly basis and then passed across to be uploaded on another system. The manual transfer of data between systems adds expense and presents a risk that information is transferred between systems incorrectly.”
Elliott continued: “In addition, whilst the employer focus given by some of these products is undoubtedly useful, it is imperative that trustees remain a key target for this technology to enable them to make the best possible decisions. If real time valuations are to become a valuable tool they need to provide a streamlined service with as few implementation layers as possible.”