While progress means things invariably move faster, it is questionable if new processes are truly optimal. In the analogue world, when everything was carried out on paper, differences between the internal processes of competing organisations were largely opaque from a customer perspective. Paper and the time it takes to process, allows for such blurring, but under the bright neon light of the digital planet, these differences are quickly shown in stark contrast, especially when one tries to get two or more different systems to talk to each other.
Over the last decade and a half the group pensions market has substantially moved from paper to digital communications. Invariably these changes were driven by a desire to achieve commercial advantage. Consequently individual organisations’ projects were run in isolation. Little, if any, consultation took place between peers, for fear of missing the opportunity to steal a march on the competition.
The net result is that if you examine the scheme establishment and contribution collection processes of any group of pension providers invariably you find each is doing the same things but in subtly different ways. As the shadow of auto enrolment looms increasingly large over the industry and particularly employers, it becomes more evident each day that these operational variations have the potential to constrict the ability to achieve the economies crucial to profitability.
The more one explores the obligations on employers as a result of auto enrolment, the more it becomes obvious that the indirect cost of complying with the new rules will inevitably be considerable for businesses of all shapes and sizes.
For the adviser and consulting community this must represent a considerable opportunity to demonstrate the need for their specialist skills given the penalties for non-compliance.
For large companies offering a range of employee benefits there is a very clear role for organisations with appropriate resources to act as a payment hub providing the employer with a single point of contribution which can, in turn, direct payments to each of the pension providers, group risk insurers and other benefits providers involved.
But from a practical perspective each variation in a pension or benefits provider’s process adds a further level of complexity to such systems. Whilst from the inside looking out each provider’s processes look straightforward it is only when these are considered in parallel with other market players, from the outside looking in so to speak, that the differences become apparent.
I have recently had first-hand experience of this issue when our Protection Forum, which works with advisers and life companies to improve operational processes in the individual protection market, mapping the different new business processes for a dozen different insurers.
It is my belief that after a decade and a half of creating electronic processes to operate contribution collection as an industry we should look at what lessons we have learnt,what works and what doesn’t
Again, whilst for the most part the processes contained all the same milestones, the timing and implementation varied drastically. For any adviser firm trying to build their own processes and training procedures these variations multiply operational expenses. When presented with their processes mapped against those of their peers, many insurers recognised all too quickly the challenges they have been creating for their business partners. A dialogue around how more consistency can be achieved is now taking place.
Against the background of this experience we are now working to apply the same process in the workplace environment. Similar to Protection Forum, Workplace Forum brings together many of the largest pension providers, corporate advisers, benefits consultants and technology suppliers to review operational practices with the objective of delivering a more efficient marketplace.
My colleagues are in the process of mapping both the data requirements and operational processes from a range of organisations who each operate their own contribution collection processes.
The objective of this exercise is to identify if there are opportunities for organisations to operate in a more consistent style in order to reduce costs to all involved. The results of this work will be used to establish agreed “Good Practice” guidelines which market participants may choose to adopt. The results of this analysis are due to be delivered in mid-July and any organisations not currently involved in the process who wish to participate should contact jason.green@ftrc.co.uk.
