Pensions agency rewrites system delivery rule book

The new scheme aims to ensure all elderly people have an adequate pension in future Pic credit: Flickr: MrSco

A government agency tasked with setting up a new state pensions system, the Personal Accounts Delivery Authority (Pada), has adopted a revolutionary approach that could be duplicated across the public sector as project managers with tight budgets look to increase efficiency.

The agency was established to deliver a state pension scheme to those who were not covered by existing employer’s schemes.

The aim is to provide the seven million people in the UK who are not saving enough to generate an adequate pension with an opportunity to do so.

The tool will be web-based and available to all employers, particularly those working for smaller companies that are less attractive to existing pension providers.

Recent reforms mean that all employers must offer a qualifying workplace pension scheme to their workers and that all eligible workers must be automatically enrolled into this chosen scheme.

Crucially, instead of constructing an IT system from scratch, Pada has decided to co-opt existing systems, according to business delivery director Simon Richards.

“Personal accounts are often characterised as an IT project – ­ but we aren’t. We’re procuring and co-ordinating a set of business services,” he said.

Put simply, this means that rather than buying a new IT system, Pada will use the technology ­ – and business processes – ­ of existing firms.

The sector has an established supply chain with a number of different businesses offering services such as fund administration and investment management.

Pada’s market research suggested it would be more cost effective to stitch together offerings from a number of these businesses rather than building one holistic system from scratch.

“We’re procuring the services of businesses that are a well-established part of the market, as well as the existing technology that supports their interfaces,” said Richards. “We want to find a bidder who has the smallest possible technical journey to go on.”

A winning supplier will provide a front end similar to their own but with Personal Accounts branding.

The provision of information will generally be through electronic channels, including the internet, email, SMS, telephone, and future digital platforms.

The bidding process began this time last year and the agency will award contracts early next year. Commercial activity will begin in spring 2011 with a slow rollout to ensure that the stitched-together technology infrastructure is capable of handling the expected volumes of traffic.

Automatic enrolment in the scheme for all workers will come about towards the end of 2012.

One of the business services purchased will be the administration of the pension records. These will be held in the UK but can be accessed by parts of the company that are not resident in the UK.

When rollout is complete, Pada will hand over administration of the scheme to a trustee
corporation.

Richards said that Pada is opting for this model not because of failings in traditional “build from scratch” government IT schemes but simply because that was the best option on the table.

“We were clear that our objectives weren’t going to be served by developing IT for its own sake,” he said.

The success or failure of the scheme will be used as evidence in the ongoing debate on the role of the private sector in delivering frontline public services ­ an option the Conservatives say could save the public purse millions.

A report from the CBI issued this week (see below) said that schemes that co-opt the private sector are vital if public finances are going to be restored to order.

“Outsourcing such services allows public sector organisations to partner with specialist providers. They will be skilled in project management, and have a proven IT infrastructure and an ability to innovate that comes from real knowledge and a passion for improvement,” says the CBI report.

CBI urges government to tap into private sector IT

A recent CBI report highlights how private sector technology can help the public sector save money.

• Glasgow City Council has worked with Serco to overhaul its internal systems and processes, saving £1.7m.

• Wakefield Metropolitan District Council has introduced a flexible working solution known as Worksmart, saving £1.6m.

• In the NHS, better use of innovations such as telecare technology could prevent 70,000 older people entering residential care every year.

• Outsourcing back-office and IT functions, using collaborative procurement and introducing shared services for IT could save billions. The London boroughs of Hounslow and Bromley have established a shared services partnership with private sector partner Liberata, which has already improved the benefit processing time in Bromley from 144 days to 27.