Analytics and the use of big data by corporate America are increasingly growing as companies look to make better business decisions. Client, internal information and databases collected over long periods of time are helping companies better understand their business and where to spend their money. The same is true for public retirement systems.
Ninety-two percent of decision makers at these plans believe their organizations would be best served by using more data analytics. And many of them already use it, to some degree. A recent survey by Accenture of 100 decision makers at national, state and local retirement plans shows that 87% of respondents already use some form of data analytics but only 19% say they use it a great deal.
Owen Davies leads Accentures North American public pension service. He says this wealth of data can provide more understanding to pension decision makers about their plans.
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, he says. 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.
One example of a plan testing the waters with big data is the Employees Retirement System of Texas. Its using its data to be more insight-driven and, according to the Accenture study, ERS is analyzing large amounts of data for key performance indicators and they are drilling down to more granular information to generate quick reports and to conduct advanced analysis and forecasting.
Of those within the survey that say they use big data, almost all (93%) say it was worth the effort. The study also finds strong agreement regarding the potential value of data analytics for specific purposes, with 80% agreeing that it can help retirement organizations provide appropriate benefits to members. The problem however, is that 66% say they would like to use data analytics more, but dont understand it enough.
Specifically, survey participants feel data can be used to analyze portfolio performance statistics (69%), analyze portfolio risk (69%), minimize error and fraud (62%), comply with reform mandates (46%), and streamline records and transactions (44%).
Joel Kranc is Director of KRANC COMMUNICATIONS in Toronto, focusing on business communications. He can be reached at firstname.lastname@example.org.
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