Big Data could be the next frontier for the troubled public pension system according to a new survey from Accenture. Nearly all of the respondents in the survey of pension decision makers (92%) cited the possibilities for increased use of big data analytics in their decision making process.
Big Data is typically marketed as a cure all for anything from restless leg, to public health, safety and retirement, and while analytics may aid many of those things few organizations in the public sector are using Big Data tools broadly. Despite most decision makers acknowledging the importance of Big Data, in Accenture’s Survey only 19% of pension agencies said their organizations use data analytics “a great deal.” Respondents said they could see using data tools for portfolio performance, portfolio risk analysis, minimizing error and fraud, compliance with reform mandates, and streamlining business processes. However, procuring and using the technology is likely to continue lagging behind at least in the near term.
“With nearly 20 million members, public pension managers are sitting on years of untapped data, a goldmine of information with the potential to yield insights and strengthen pension performance. Data driven decision-making can help cash-strapped retirement systems provide appropriate benefits and services to their members, an increasingly challenging responsibility, as well as help in areas such as investment efficiency and compliance,” said Owen Davies, who leads Accenture’s North American public pensions practice.
Accenture also recently launched its own enterprise technology platform for public pensions which falls in line with some of its other systems integration tools for public organizations. The product runs on Oracle PeopleSoft and aims to make pension systems more cost effective and employ a flexible IT infrastructure. The product and others coming to market with the same goal could be notable for number crunchers inside and outside of pension systems in the age of cutting costs-of-living adjustments, and other funding changes as retirement systems deal with underfunding.
As pension systems come under increased scrutiny from courts, pensioners, and watchdog groups, Big Data could also make the pension funding process more transparent – a welcome change. Several states are facing public questions about pay-for-play funding or simply not allocating enough to meet pension obligations and analysis of more data from pensions could provide more answers about how those decisions are made.
“Public pension organizations face major opportunities to develop modern technology capabilities while controlling costs,” said Davies.