September 2022 – LexisNexis’s Alan Clay talks data, dashboards and digitalisation with PASA Chair Kim Gubler and PASA DataWG Chair Kristy Cotton here.
PASA Experts for Identity Management
The UK pensions industry has become increasingly aware of the importance of managing member identity in recent years. A number of trends lie behind this, key of which have been:
- The introduction of GDPR in 2016 and the legal and reputational damage risk to the industry through releasing data to an incorrectly identified member
- A growing awareness of fraud in the UK pensions industry and the need to ensure benefits are paid to the correct member or beneficiary
Delivering to savers needs is also a key consideration, and schemes can only deliver member-centric pensions administration when they have a clear view of their members’ identities. Understanding who members are, where they live, their contact details, their marital status and, sadly, when they pass away, enables pension schemes and administrators to meet their fiduciary requirements, prevent fraud, manage longevity exposure and put the member firmly at the heart of everything they do.
One aspect which helps ensure a clear view of member identity is robust IDV processes which enable schemes to confidently confirm an individual is their scheme member/pensioner, mitigate risk and facilitate a frictionless member experience. In practice, the greater trust a scheme can have in a presenting individual being the member/pensioner they say they are, the lower the risk and the greater the chance of a seamless member experience.
Managing identity should also be risk-based; in some member processes an IDV check will be appropriate but this check might differ depending on the circumstances and will be more robust if a scheme already has a clear view of its members’ identities. For example, a member calling to request a scheme booklet might reasonably expect to have an experience based on a lighter touch check, whereas a member asking for retirement benefits to be settled should expect an in-depth IDV check to be undertaken.
In addition to event driven checks, periodic screening of pensioner identity has taken place routinely for many years in the industry. However, there has been no single ‘best practice’ approach to this across the industry whether for point of contact or periodic checks and while each business will have to decide for itself how best to manage the responsibilities and risks of identity checks, PASA recognises a need for guidance to establish the most appropriate practices for practitioners to adopt.
The purpose of the PASA Identity Management Working Group is:
- Understand the range of practices around establishing a clear view of member identity within the industry
- Highlight specific life events and member interactions that will trigger the need to conduct IDV checks, and why and when periodic screening should be undertaken
- Consider the options available to pension scheme practitioners and trustees to maintain a clear view of member identity and undertake IDV checks
- Set out an overall framework and good practice for all practitioners to follow.
Good practice should allow for the range of practitioners and schemes within the industry and follow and provide guidance on the risks and benefits of different approaches. The group will draw on experience from professionals within the industry and look to technology providers to support the industry to develop its understanding of the options available.
The scope of the working group will cover member identity in:
- UK trust and contract based occupational pension schemes of all sizes
- Schemes at all stages of maturity (including pensioners only or fully bought out)
- All types of administrative provision
Deliverables and barriers
The primary deliverables of the working group is to set out good practice for maintaining clarity of member identity and undertaking checks whether at the point of taking benefits, other contact with a member or at fixed periodic opportunities. This will provide greater certainty benefits are being paid to the true beneficiary, throughout the lifetime of the benefit, and personal information is only provided to members who are entitled to access this information.
The working group shall deliver its guidance on managing identity and IDV checks in Q1/2 2022 with the sequence of work anticipated to be as follows:
- Outline a framework of the member/pensioner lifecycle, mapping on key interaction points/life events which are underpinned by identity management and IDV processes
- Identify best practice through industry research and, if required, survey
- Document existing practice and identify specific existing challenges that need to be addressed
- Identify developing opportunities and practices, e.g. Digital ID
Paul Sturgess (PASA Board Sponsor)
Zoe Horsfield (Chair)