As part of its goals for the year to improve data quality, the Pensions Regulator (TPR / the Regulator) has unveiled a new data strategy, urging the pensions industry to enhance data standards to benefit schemes, savers, and the broader economy.
Drawing parallels to Open Banking – which has contributed £4 billion to the economy by enabling innovative financial management – the Regulator envisions similar advancements through improved data practices in pensions. The Regulator emphasised the potential for the industry to deliver more efficient services and foster innovation to empower savers to better engage with their pensions.
However, the Regulator's research indicates that many schemes still maintain non-digital data, leading to inconsistencies, higher costs, and security vulnerabilities. With consolidation of the DC market and the upcoming pensions dashboards, the need for accurate data is more pressing than ever.
To address these challenges, the Regulator plans to:
• Establish clear data standards and provide guidance: TPR will define industry-wide data quality and consistency standards, offering pension schemes clear guidelines to meet regulatory requirements and improve data accuracy. This includes promoting data literacy across the sector, ensuring that all stakeholders have the skills and knowledge to manage and interpret data effectively, reducing errors and optimising data practices.
• Ensure data collection aligns with positive saver outcomes and supports effective regulation and innovation: TPR aims to ensure data collection not only supports compliance but also enhances saver outcomes by enabling better decision-making.
• Modernise data collection methods to reduce burdens on stakeholders by improving its data platforms: TPR plans to enhance its data platforms by moving away from form-based collection methods and enabling pension schemes’ systems to communicate directly with TPR’s systems. It is hoped that this seamless data exchange will reduce administrative burdens and enable more accurate, real-time reporting.
Additionally, the Regulator will form a working group comprising pension and technology experts to design a framework for responsible innovation in pensions. The strategy also encourages the safe adoption of new technologies, including AI, aligning with the government's AI Opportunities Action Plan.
AI is already playing a role in TPR's regulatory functions. In response to written questions, the Pensions Minister recently confirmed that TPR has been using AI over the past year to support its regulatory activities and decision-making processes. The Minister also highlighted that TPR is focused on ensuring the safe and ethical adoption of AI across the pensions industry, aligning with the Government's goal to drive economic growth and improve public services through technology.
But while the adoption of AI is gaining momentum, recent research suggest that many remain cautious about fully automated services. Of the 1,000 UK adults surveyed, 79% expressed preferences for a mix of human and AI interaction when managing their pension accounts. This figure comprised 11% saying they would be comfortable with AI taking the lead, 34% preferring mostly human agents with AI acting as support, whilst a further 34% expressed a preference for an equal mix of humans and AI working together. Only 16% of the respondents preferred entirely human support.
If you would like to discuss anything raised in this blog in more detail, please get in touch with a member of the pensions team or your usual Brodies contact.
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