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The Actuary The magazine of the Institute & Faculty of Actuaries

Information overload?

Employee pensions are an increasingly high-profile part of a business, and the amount of information available to the pensions industry is increasing hourly. Pensions professionals can’t afford to miss potentially vital developments that may change the way a client’s scheme should operate. Given that it is imperative to have accurate and up-to-date information, what should an effective electronic information environment represent? While we evaluate just about every other aspect of the business process, the efficiency of the translation of information into strategic policy is often left unaddressed. This lack of established process makes performance measurement of information systems subjective, and raises several pertinent questions:
– What are the primary functions required of an electronic information service?
– Can all data be captured and managed internally, or is it best to use a specialist third-party information system a pensions industry equivalent of Reuters or Bloomberg?
– Is the traditional alternative of ‘bought-in’ information and analysis still making a valuable contribution to the business?
– Should we stick with web-based information, or does the pensions expert need professionally delivered legal and technical information?
– Have current services made professionals’ lives any easier, or have we saved ourselves from drowning in a sea of paper, only to be overwhelmed by a tidal wave of online data?
To answer these questions we need to understand the individual businesses requirement and uses for information, and to lay down some basic criteria.

The pensions industry is subject to heavy statutory and legislative requirements, with more than 50 Acts and 450 statutory instruments to be considered, along with hundreds of related law reports, rulings, and determinations, and things rarely stay static for long. In 2002 alone, there were 240 Pensions Ombudsman’s determinations, 62 significant legal judgments, 39 statutory instruments (a quiet year), and 32 important reviews and reports; not to mention a major green paper from the Department for Work and Pensions, a major consultation document from the Inland Revenue, and innumerable private surveys and research reports published.
As the tide of recent pensions-related legislative change shows few signs of abating, it is advisable to keep track of proposed and also of historical changes.

Individual member or scheme reviews
Changes to the pension framework, coupled with a falling stockmarket, make many pension schemes expensive to run. Consultants must fully consider how any industry changes will affect their clients, on both a scheme-by-scheme, and member-by-member basis. As such, it is essential that an information resource is capable of showing changes, for example to the text of an Act, so that differences between the past, present, and future can be readily appreciated.

Analysis and interpretation
It is vital for any pensions professional to know how any news affects both the industry in general and the business in particular. One of the chief benefits of using a specialist pensions information service is that much of the time-consuming filtering and assessment has already taken place. This allows you to quickly and efficiently get to the developments relevant to you, and to make the best strategic use of that information.

Data manipulation and management
The need for a comprehensive and current database is only the beginning. Often, in a broad and complex field such as pensions, it is unclear precisely which documents are most relevant to the job at hand, so a powerful, yet flexible, search function is important. A full multi-user environment that can accommodate the different needs of different people using the same system at different times should also feature strongly on any wish list. Most users will have a preferred way of carrying out research, so an audit trail to see which documents have been reviewed, and by whom, is a key consideration. Allowing users to add their comments to the text and the ability to instantly cross-reference related texts, such as an intranet or a client’s external knowledge database, is also of prime importance.

Basic system ‘friendliness’
The unique features of any ‘new’ resource can be assimilated more easily if it incorporates processes similar to those of the ‘basic’ software packages most people already know (eg Word or Internet Explorer). Despite, or perhaps even because of this, the level and depth of training and support offered is often overlooked.
The in-house capture and management of all relevant data is not a feasible option for most actuaries. Many organisations have insufficient resources to match the functionality and content offered by a third-party information service supplier. Even where the resources exist, they may have been acquired at an uneconomically high cost.
In difficult times it is even more important to extract maximum benefits from existing resources. By obtaining the right information at the right time, organised so that it can be easily interpreted and used, changes can quickly be put into the context of the business as a whole. This allows actuaries to focus on their core business function and to provide clients with the most appropriate recommendations on how best to manage their pensions.