The future of pensioner payroll – and why it really matters

2 September 2024

The main purpose of any pension scheme is to provide its members with an income in retirement, which they can rely on to meet living costs and other financial obligations.

If this purpose is not met, then pension services like actuarial advice, investment consultancy and scheme administration become somewhat irrelevant.

One of the most important things we do at First Actuarial is to make sure that more than 46,500+ pensioners across 200+ pensioner payrolls are paid the correct amount on the correct date every month. It’s not just important for the pensioners themselves. It’s also essential for First Actuarial’s relationships with scheme trustees.

For many pensioners, their occupational scheme pension may be their main or only source of income – especially before they reach State Pension age – so they’re reliant on their timely and correct pension payment for even their basic living expenses.

This places a great deal of responsibility on the shoulders of our national payroll team and on First Actuarial as a whole. A reliable, accurate and timely pensioner payroll process is essential for maintaining the trust we build up in our relationships with pensioners and scheme trustees over time.

What is the future of pensioner payroll?

There are two areas of change that will really impact the future of pensioner payroll – automation and self-service.

In the main, members of pension schemes who are retiring today are much more technologically savvy than their predecessors from only a decade or so ago. After all, they’re likely to be using smartphones, apps and self-service portals on a daily basis. We’re seeing that a large number of new retirees are already used to updating their personal details online and receiving digital payslips. They expect the same features in retirement.

Of course, there will always be a small number of scheme members who prefer to receive their printed retirement pack or paper payslips in the post. First Actuarial and other providers in the pensions industry will of course continue to cater for their preferences. But for the most part, the future of pension communications is online.

We’re always keen to make our work as efficient as possible. This applies as much to pensioner payroll as it does to our other services. The firm is enjoying strong business growth, and as we bring new schemes on board, it’s more important than ever that we provide the most efficient payroll service possible.

Looking ahead to the short and medium term, we’ll be investing more of our time and efforts in new payroll software, which will bring more automated payroll processing and reporting. We’ll also be introducing self-service portals for pensioners. With these innovations, we’ll be streamlining every stage of our payroll processes.

Sentient robots? Judgement Day? What about AI?

Who knows where artificial intelligence (AI) will take us in the years to come, but I think we can say with some confidence that ongoing expansion and adoption is inevitable. The first question that springs to mind with AI is – how will this affect day-to-day payroll operations? The answer isn’t clear right now, but I believe we will see a shift in the skills required of a payroll professional rather than a complete replacement of their role.

It’s true that AI may be able to do a lot of the heavy lifting when it comes to payroll processing in the future. However, in my opinion, the human touch will remain essential, particularly in the pensioner payroll world.

Tools such as chatbots are useful up to a point, but nothing will replace the reassurance you get from a conversation with a real person. It’s this kind of personal touch that we’ve always prided ourselves on at First Actuarial. This will continue to be the member experience we offer in the years to come, whatever the future holds with AI.

At First Actuarial, we will continue to give all our scheme members the best service possible. Robust payroll operations mean that they will be able to rely on their pension income when the time comes to enjoy their retirement.