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the rewards Waiting for stakeholder take-up to escalate means that quite a few organisations are holding off to see what happens in the market, what can be done to make it more viable, and whether the government will introduce compulsion. For those that have not waited to introduce stakeholder in their suite of products, integrating the applications to run stakeholder has produced varied experiences. The technology base for stakeholder already exists in products such as defined contribution schemes or group personal pensions. The biggest change is in the network and achieving web-based transactions. The key architectural change that providers need to undertake is a full systems integration with their distribution networks and customers to allow for real-time transactions and interactive capabilities. Paul Dix, retail finance practice manager at IT services company Keane says: “The core of the software is similar to other group personal pensions or personal pensions software. The complexity is not so much in managing the reconsolidation process, it’s in managing the exceptions.” Unlike DC monthly processing cycles where a said amount of money is delivered to the investment manager on time and the money allocated to the individual member’s account, stakeholder introduces member holidays, where no money is contributed, and flexible amounts for contribution depending on the member’s cash position that month. “The technical support to run an interactive website where you’ve got database and administration systems sitting there is different,” says CTC’s (Chambers Townsend Consultants) managing director, Nigel Chambers. “DC software, although the core data is very much the same, requires the type of unitisation expertise that the insurance industry has, rather than the pension industry. But we’ve got it now,” says Chambers. He estimates that there are about five companies offering software for the pensions market. But Paul Sturgess, director of business services at FPS, notes that it should not be underestimated how far insurance companies have to go in the other direction in order to service the stakeholder market because they have traditionally not been very active in the big corporate market. “For those insurers who have adapted their personal pensions systems it’s a big jump because they’re built around individual contribution collection and contributions defined in monetary terms that are changed once a year as opposed to something that is truly cash conscious like stakeholder,” says Sturgess. The biggest challenge faced by providers integrating stakeholder is ensuring they have the correct person at the helm, suggests Sturgess – someone who can envision the product end-to-end within the context of the company and its existing products. “It’s about specifying the totality of it and it moves you beyond systems skills, almost into product and design skills.” From
mainframes to interactive websites Manual intervention usually occurs when a member’s record is incomplete, or the member has moved or changed their conditions of employment. The lack of audit trails means there is no efficient measure for how well processes are being performed, and as a consequence, you don’t know what they are costing you. In a one per cent world might this read as how much are you losing? There are different considerations as regards how efficiently your operating process is going to be over the web, explains Punter. Things like effectively monitoring response times, how many people are hitting the site and how many are giving up because they found one of the screens too difficult are equally important in determining the effectiveness of the system. “You’ve got no information on that. You might know how many hits there have been to the site, but you can’t tell when and why somebody’s switched off,” he says. Randle Williams, director of retail pensions at Legal & General agrees. He explains that people hate getting information through a circuitous route. For instance: “Take a look at call centres. People resist pressing all those numbers to get to the right person. If you can answer quite a bit of the questions online, that helps the process along and you can ensure that the customer comes back to use the service because they were not put off.” Legal & General started its migration towards e-commerce capability three years ago because it identified it as a key area of growth. Its stakeholder product, which was launched on 6 April, took 18 months to design, test and implement. The base already established three years before gave the company the skills and experience required to approach the development and implementation of a web-based stakeholder offering. For instance, when Legal & General launched its stakeholder in April the following web-based functions were available to customers: contribution schedules using L&G’s systems or from payroll extract; payments by TT, direct credit and direct debit; view contribution history online; and contribution validation to the customer and an automatic upload of the data to L&G’s back office systems. Members could also make the following online alterations to their pension: change personal details; switch existing funds; redirect future premiums; and change premiums. The fifth release, due out this quarter, will include automated financial reporting for direct debit-based contribution, online warnings for late payment and payment at frequencies other than monthly. Williams notes that one of the key advantages of the new stakeholder system was the integration of their affinity groups into the L&G network. This effectively extends the company’s distribution networks by linking to its partners’. Ultimately, the integration of affinity groups will reap some of the greatest rewards for the provider, particularly when one takes a look at where technology is headed. The next wave of web services will revolutionise the pensions market, changing the way the industry interacts with customers, suppliers and other businesses. Developing the next generation of web products, Microsoft’s .NET strategy and IBM’s Websphere are set to simplify and speed-up software development by using less code and making it language-neutral. What this means for providers is that, technically, it should be easier and quicker for them to bring products and services to market in the coming years. The software solutions are aimed at creating an ‘internet for computers’ whereby computer systems are interlinked through a standardised data format called XML (extensible markup language). The IFA’s machines can be interlinked with the employer’s and Inland Revenue for pension illustrations. For fact-finding exercises the IFA can contact the bank for real financial commitments or the employer for benefits accrued for in-service death or the customer’s current tax code. What used to take hours will take minutes provided the customer gives their consent to have the various bits of information released. Mike Lloyd, technical strategy manager at financial services solutions provider Marlborough Stirling, says: “Web services [Microsoft’s term for how computers interlink across the internet] can be used by almost any device to interrogate systems. Web services can also be used to request updates. Pensions holders with PDAs and mobile phones can have fund performance figures regularly downloaded for comparison in their pocket excel spreadsheet.” Lloyd,
who also sits on the Microsoft Software Architects Council, notes
that, although in the past software revolutions have required a
few years to take effect while existing software lives out its usefulness,
the .NET revolution will not be so generous. “Only a thin veneer
of .NET-enabled components will allow older applications to participate
fully in the new age,” he says. This means quite a few providers
would be left in the lurch if nothing is done to migrate or change
their systems. With more and more people becoming internet savvy,
accessing information on practically any topic any time of the day
and raising expectations, providers which ignore the trends may
find themselves falling behind a fast escaping technology train.
The business and e-commerce prompted by stakeholder can be harvested
by a company’s other applications across multiple brands – these
are still the unexplored benefits of streamlining business processes.
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