More and more pensions organisations are realising there are benefits to be had from using electronic information resources, writes Eric Wilton
Precise, comprehensive, and continually updated information about key developments and initiatives in the pensions industry has never been more important for organisations of all kinds - from pension funds to their regulators and advisers.
With the constantly escalating burden and complexity of compliance requirements, it is becoming increasingly unrealistic to contemplate the handling of information relating to the pensions industry by purely physical and manual methods.
One solution for which an increasing number of pensions organisations are opting is to use an electronic information resource supplied by a third party.
These electronic resources carry an initial acquisition cost, but this can easily be counterbalanced by the considerable savings that the pensions organisation will enjoy by virtue of having the electronic information resource in place.
Savings that need to be factored into the equation are not only the obvious ones such as the salaries of in-house staff who would otherwise have to be employed to obtain the information manually.
There are also significant potential savings in terms of rent of office space, office resources and, of course, the considerable expense of telephone calls.
In addition, there are the potential costs of time, oversight and error that are all too likely to build up within information that has been manually collected by a pensions organisation but not independently verified. Add to this the importance of maintaining the morale of a pensions organisation's most expensive business resource ' its professional staff, who are unlikely to enjoy any manual information collection and collation process ' and the importance of making correct decisions with regards to information resources becomes critical.
But what kind of third-party pensions industry information does a pensions organisation need, and how should the company go about choosing a third-party information source in the first place?
First, let us consider what type of information should feature in the third-party offering. While the type of information required will change from time to time, the principal categories of data required are likely to be the following:
l Acts of Parliament and Bills
l Statutory Instruments (including drafts)
l Regulatory texts
l Law reports and Ombudsman's determinations
l Relevant EU materials
l Official and semi-official reports and consultation documents
l Daily news
l Parliamentary coverage
l Comment, articles and conference papers
l Information about the pensions industry in other countries
l Surveys and statistics (spreadsheet enabled)
Ideally, all this material should be accompanied by detailed editorial notes that provide broad-ranging information on the development of the text in question, with cross-links to commencements and amendments, interpretations and modifications, orders and regulations, case citations and regulatory references.
As regards the actual selection of the third-party information, the vendor's information offering should, at a minimum, offer all of the following:
Full integration of knowledge environments.
If a pensions organisation is going to derive serious benefit from electronic information it needs to get full access to all the benefits that accrue from the ability to link knowledge environments
Full responsibility for control over the sourcing of the information.
An integrated electronic information resource takes on the information sourcing responsibilities on behalf of all its users, which is, consequently, good for individual pension organisations and for the pensions industry as a whole, both from an information dissemination and cost perspective.
No pensions organisation can define precisely for itself the particular information that it will actually require at any particular time. The beauty of a first-rate third-party information service is that it ensures all the information a pensions organisation needs is available all the time. Expecting one hundred percent coverage is not always realistic, yet one should certainly aim to get as close to it as possible.
The provision of an objective, holistic and generic service.
Because an external information provider's service will be directed at the entire industry, all users of the service should in principle benefit from the objective, holistic and generic service that is being offered.
All the inherent advantages of electronic information distribution over paper-based distribution.
For most pension organisations with limited paper information resources, the high cost of photocopies requires a limited distribution policy and in most cases, a library. With electronic information that is network and/or internet-based, this issue ceases to be a problem. Additionally, the unpleasant, stressful and annoying problems of key documents being lost or mislaid, and desperate searches for such pensions paperwork, will become a thing of the past.
The facility of staff-wide access to the information.
Some organisations may initially feel uneasy about the prospect of all their staff members having access to the comprehensive pensions industry information provided by the third-party vendor. But this is a shortsighted view. In effect, the organisation-wide availability of the information means that every staff having access to it becomes an expert in the pensions industry, and the advantages of this outweigh any other consideration.
The freeing of significant internal resources that results from moving an in-house information research facility to a competent external vendor.
Whether a team of in-house researchers is used, or whether a pensions organisation operates a research library, the in-house cost of having a pensions industry research facility is formidable. Sourcing the information externally makes abundant sense from a commercial perspective, allowing the user to benefit from the vendor's significant economies of scale.
Ease of passage through the electronic information environment is crucially important. Anybody who has spent any time on the internet will be aware that knowing information is there and actually finding it can be two exceedingly different propositions.
Search engines and bookmarks are useful but all too often, finding information on the internet can be as frustrating and time-consuming as in the non-virtual world. Similarly, replacing individual books with any number of CDROMS can involve a complex juggling act. Meanwhile, the cost of information retrieval is the information equivalent of the ticking taximeter.
Pension organisations need to know about key developments as soon as significant documents and/or news become available. The benchmark that should apply to information access is precisely this: that the information should be as current as it is reasonable to expect it to be.
The point is that pensions professionals don't only need current information. They also need recourse to old versions of documents and to be able to track change.
The requirement to access older materials indicates three variants of historical information, namely: historical variants of re-issued documents; historical and planned amendments as evident from current documents, which allows old documents and current ones to be considered side-by-side and offers maximum flexibility and ease of change tracking; and old versions of amended documents. Time-related issues are not unique to the pensions world, but it could reasonably be argued that few other industries require quite the same degree of access to track change as precisely and as frequently.
As pensions organisations migrate from physical to electronic information resources they need to be both mindful and bold. Alan Pickering, Chairman of the UK National Association of Pension Funds (NAPF), recently commented that in the future, the theme of the pensions industry would be 'out with the straitjacket, in with the brains'.
In an information context, this might be interpreted as indicating that pensions organisations should be prepared to think about their information sourcing policy in new ways.
The good news is that there are some very resourceful electronic information services available and there is every reason for pensions organisations to be bold and grasp the very tangible benefits that third-party electronically delivered information can offer.
l It is becoming increasingly unrealistic to handle pension information manually.
l Electronic information resources can provide considerable cost savings.
l Such resources do carry acquisition costs but this is usually offset by benefits.
Joined as head of strategy, multi asset, in June
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