Charles Palahniuk, Albert Einstein and Pension Data Insanity

Neil Copeland

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American author Chuck Palahniuk has written a lot of things. “Maybe humans are just the pet alligators that God flushed down the toilet”, for example. Or “All God does is watch us and kill us when we get boring ” The latter quote being of particular concern to my actuarial colleagues.

He also wrote “any behavior that is not the status quo is interpreted as insanity, when, in fact, it might actually be enlightenment.”

Everyone knows the pensions data status quo. Poor data, incomplete data, inaccurate data is rife… Yet when I make the, what seems to me entirely obvious, link between poor, incomplete data and a poor administration experience for trustees and members, the number of people who appear to fail to see that link leaves me uncertain as to whether I’m insane or enlightened. Well, it doesn’t really. I’m pretty clear that I’m enlightened, at least on this matter.

It also seems obvious to me that poor and incomplete underlying data means that all the time and money spent deliberating in great detail over sophisticated funding and investment plans is like just so many alligators being flushed down the great white pensions toilet bowl.

Why do we find it so hard to have an honest conversation about pensions data?

The point at which a new administrator takes a scheme on is an ideal opportunity to undertake a root and branch review of a scheme in terms of its benefits and data.. The reality is poor underlying data is very often the invisible factor underlying the disatisfaction which causes a client to move in the first instance, though it may manifest itself in other guises.

But, as an industry, we seem to think that our clients can’t handle the truth. Rather than engage the client on data quality and the benefits if addressing any issues that the scheme might have in that regard, you take one set of poor data off the ceding administrators system and stick the same poor data on to your administration system. The data is still poor. Switching admin systems doesn’t magically improve the data.

The associated problems are perpetuated not solved. And so the pensions data insanity continues

This approach short changes everyone.

There are tangible benefits to sorting out scheme data for trustees, members, administrators, actuaries, employers – just about everyone. Administrators need to explain these benefits to their client and demonstrate the value of investing in the best dataset achievable for the scheme. It should help that the Pensions Regulator actively requiring trustees to address their data issues.

Spence & Partners has always understood the importance of data, Our development of a bespoke set of data and benefit audit tools and data and benefit cleansing processes, played a significant part in securing our appointment to the PPF’s Special Administration Services Panel. Sane trustees will recognise that these same tools and procedures are just as applicable to addressing the data problems which underlie so many ongoing pension schemes.

Einstein is claimed to have suggested that a good definition of insanity is doing the same thing over and over again and expecting different results. Unfortunately its an equally good definition of many pension schemes’ approach to data.

Neil Copeland

Post by Neil Copeland

Director, pensions consultant and adviser to trustees and employers on all aspects of work based pension schemes.