Aecus European Innovation Awards 2015 Name of the Innovation Project: Enabling UK s National Employment Savings Trust (NEST) scheme to deliver a national pensions scheme Name of Supplier Organisation(s): Tata Consultancy Services, Limited (TCS) Name of Client Organisation(s): NEST
Background What was the business challenge/opportunity? The National Employment Savings Trust (NEST) is a scheme created under UK Pensions Act of 2008 (which encourages workers to save for retirement) and facilitates automatic enrolment into a workplace pension scheme. NEST is available to all employers as part of its public service obligation (PSO) and is a cornerstone to the success of the UK government s national pension programme. Automatic Enrolment is a key strategic initiative of the UK government to solve the long term pension savings issue that will become a significant problem for many European societies. It requires employers to automatically enrol eligible workers into a qualifying workplace pension scheme from October 2012, and presents a significant change in workplace pension provisioning. This was the first time the UK was undertaking such an extensive initiative. In order to ensure that all businesses would have access to a good quality pension scheme which would allow them to comply with the legislation, NEST needed a forward looking, yet simple, intuitive and low cost digital platform and a matching operational strategy. Therefore, it had to be done right the first time. NEST was therefore looking for a partner with a proven track record in UK life and pension service delivery and the capabilities to provide IT, IS and business process services. After a detailed evaluation, TCS was chosen to be its solution partner and scheme administrator. Approach What was the innovation that was delivered? In what way was it innovative? TCS leveraged its innovative FORE TM transformation methodology. FORE TM is a unique way of achieving business transformation. It seamlessly brings together TCS strengths including PIBS TM sourcing strategy framework, Business Process Management, Industry domain expertise, Platforms, Automation, TRAPEZE TM suite of solution accelerators, IT-BPS Synergy, Analytics and Innovation to understand and address customers business challenges in a holistic manner. TCS recognised that the challenges in building the national pension scheme from the ground up were two-fold: Quick rollout: Ensuring quick deployment of a platform to enable seamless Automatic Enrolment process Seamless scale up: Flexibility to address significantly high end user interaction volumes resulting from increased enrolment. TCS and NEST decided to create an end-to-end solution to address these challenges. TCS Insurance BaNCS for accelerated rollout TCS Insurance BaNCS, a highly customizable, scalable and proven platform emerged as the perfect solution, enabling quick deployment and launch of the Automatic Enrolment. The philosophy of BPaaS (Business Process as a Service) is at the heart of its implementation. FORE TM transformation methodology for efficient scale up
TCS used multiple levers of FORE TM : Domain knowledge: In-depth industry expertise based on providing several years of service to the UK pension industry. IT-BPS synergy: Perfect synergy between IT and BPS built over more than 45 years of experience in information technology. TRAPEZE TM : A suite of solution accelerators enhancing our solutions. The email manager solution helped track and manage transactions which were done over emails. Co-innovation network (COIN TM ): Collaboration with an innovation partner to implement a webchat platform. Continuous Improvement By leveraging FORE TM automation lever, TCS launched multiple improvement initiatives. These initiatives included: Employer Authentication on IVR Customer relationship Management tool Opening up web chat capabilities for Employers for resolving transaction queries System Integration Automation of RTI (tax office) processing Digitization of process, thereby eliminating manual work In addition, the following innovative enhancements were delivered: Innovation implementation of multiple channels - For the first time in UK pensions industry, a seamless combination of multiple channels was seamlessly deployed. These channels included: Web portal for employer and employee transactions Online secure mailbox for all communications Online help centre B2B file transfer Interactive Voice Response (IVR) Telephony Webchat Mail room Email The BaNCS platform integrated with systems of investment managers, HMRC, payment systems, banking partners, tracing agencies and annuity providers. Delivering value through an online hub TCS and NEST launched an online hub free service called NEST Connect in September, 2014. Professionals including advisers, accountants and the payroll bureau can utilize this hub to help employers meet new pension duties. Full integration with payroll system providers will be introduced in 2015.
Impact What was the value delivered? In about 27 months since launch of Automatic Enrolment, the membership has grown to over 2 million enrolments with over 11,000 businesses. The growth phase will continue until 2018 as hundreds of thousands of small and micro employers and millions more employees are affected by automatic enrolment duties. A combination of TCS BaNCS and FORE TM transformation methodology helped NEST get the Automatic Enrolment process first-time-right within time and budgets. TCS helped NEST achieve credibility as a robust solution contrary to many other similar public sector initiatives. NEST was able to achieve the following key results: Reduced cost of service: Delivery of a high quality pension scheme which for most savers will work out as broadly equivalent to 0.5 per cent AMC or less over their saving lifetime a good benchmark for low charges previously enjoyed by members of large workplace schemes, now offered by NEST to those working for any employer wishing to use the scheme, no matter their contribution rate. Increased efficiency: Over 97% of opt-out cases serviced through digital channels. High satisfaction scores: 92% satisfaction monitored through web chat. Increased reach to end users: Delivered 8 million + communications over electronic channels. Tools, techniques and technologies Which of the following was important for this case? Innovative use of Important Details Y/N? Analytics Y Business Objects used as technology reporting, query and analysis, and enterprise information management Applications Y Oracle recon dedicated to the management of account reconciliations Case 360 used for document and case management for compliant module Commercials/contractuals Y A unique pricing arrangement exists between TCS and NEST such that the volume risks associated with a new product launch and unknown market share have been transferred from NEST to TCS in relation to the administration services Digitisation Y Innovation labs and co-innovation network (COIN ) initiatives: We provide all the advantages offered by digital innovations to our clients. We have facilitated multiple client and trustee visits to our sites, both in the UK and in India, and shared information on our operational procedures and controls with them. Invites have been extended to the clients leadership teams for the TCS global summits, where the latest technology trends are showcased alongside TCS capability and footprint. This is especially important to
help clients prepare for and maximize benefits from the new digital age. Governance Y Within TCS, the NEST account is run as an enterprise management team to bring together the best expertise and practices of the many different specialisms required to run solution successfully. The account is overseen by its own Risk and Control Committee consisting of responsible TCS Executive management and Risk Compliance and Delivery Excellence leaders. Joint governance meetings with NEST are conducted on a daily, weekly and monthly basis. This helps monitor the operational performance of TCS and the scheme in terms of its service availability and service response time. Performance reports are shared with NEST in the governance forums. The feedback from NEST is used to further improve our service quality. Additionally, we have provided NEST with a business objects reporting tool through which it can generate bespoke reports to monitor our performance. Strategic governance: Strategic Steering Group Operational governance: Customer Services Governance Group Transactional governance: Service Delivery, Change Advisory Board Multi-channel engagement Y We deliver the scheme predominantly over digital channels including a web portal, IVR or telephony, webchat, mail room, email and secure messaging, with a fallback capability of handling paper based interactions. A TCS managed contact centre handles both electronic and paper interactions. Infrastructure Y Highly scalable infrastructure hosting to handle increase in end user volume over multiple years Logical and physical segregation of environments Encryption of data in transit and data at rest in compliance with FIPS 140 standards 24x7 proactive monitoring, service desk, L1, L2 and L3 support Build and support multiple domains Windows, Citrix and Email, network and voice, database, identity and access management, EUC, AIX, storage and backup, security monitoring, procurement and vendor management Periodic execution of BCDR processes for new projects and existing BAU support Platform Y BaNCS This in-house, highly customizable application was used to support our solution for all mainstream business processes. These included ensuring employer participation, enrolling members, collecting
contributions, managing accounts, accessing savings and passing funds to the fund administrator. The NEST platform we have developed encompasses systems and processes that are scalable and not volume bound. Process improvement Y FORE TM Methodology: As a result of implementing this methodology for the NEST pension scheme, the continuous improvement score for NEST progressed from 3.33 to 3.46 during the period 2013 2014. On a scale of 1 to 4, 4 represents truly digitalized services that are entirely aligned to a customer s business objectives. This score reflects not only the high level of automation and quality, but also the drive for continual improvement. Industry specific knowledge Y We leverage the combined expertise of our industry trained and certified Chartered Insurance Institute (CII) consultants to support the value chain of life, annuities and pensions companies. Relationship/vendor management Y In 2014, TCS tied up with CII the world's largest professional body dedicated to insurance and financial services, to create in-house centres that facilitate training and external certifications through CII. These certifications are universally recognised as the global standard. TCS-NEST account team has defined a framework for effective management of relationships with vendors. This framework is a combination of industry best practices and improvisations of the TCS-NEST account team, which has generated the desired outcomes for both TCS and NEST. On a monthly basis, TCS monitors, measures and manages the performance of vendors on multiple parameters to understand the health of the overall engagement, thus determining key areas for improvements. Security Y The highest level of information security is assured to participants. In a world where data privacy is sacrosanct, TCS ensured that the services are delivered from ISO27001/2013 certified locations that comply with the industry benchmark for information security. The TCS NEST account has its own accreditation. Industry and technology best practices as well high standards set by the government have been fully integrated to deliver a secure yet simple solution for participants to interact with. A secure message mailbox for each participant ensures safe delivery of communication. Multiple rounds of safe testing were performed by an accredited agency to ensure that the
scheme website is free from any potential threats and vulnerabilities. Sourcing model/location Y TCS s Global Network Delivery Model TM (GNDM TM ) enables clients to take advantage of the expertise and cost leverage from beyond the UK boundaries. Measuring the impact Which of the following was important / quantified? Measure Important Quantified? (% change, / generated, ROI) Y/N? Cost reduction Y Delivery of a high quality pension scheme which for most savers will work out as broadly equivalent to 0.5 per cent AMC or less over their saving lifetime a good benchmark for low charges previously enjoyed by members of large workplace schemes, now offered by NEST to those working for any employer wishing to use the scheme, no matter their contribution rate. Improved C-SAT / NPS Y 92 percent CSAT monitored through webchat Speed to serve Y 78.8 percent reduction in average handling time (AHT) of member queries supported by IVR functionality enhancements 87 percent reduction in turnaround time for responding to mails by implementing Email Response Management Solution Differentiation Y Lean Six Sigma training, which helped NEST use the elements of FORE TM to understand and implement change in its own organization Product development Y Focus on digitisation Development of multi-channel capability by implementing webchat to serve users of all genres. This resulted in 20 percent reduction in employer queries through redirection to the webchat option. 40 percent reduction in average calls per employer as a result of changes to the online system and features Productivity Y 20 percent reduction in manual work items through system integration 80 percent reduction in manual intervention of exceptions for unallocated contributions Risk reduction Y Automation of HMRC PAYE tax return filing process for all income tax charge deductions from member claim payments, resulting in
complete -compliance with RTI and improved operational efficiencies 20 minutes saved per member who has retired 2 hours saved in monthly reconciliation of the tax returns filed Operational flexibility Y TCS offers 24x7 service and a rich user experience across all channels Client Comments We've worked closely together to realize new and innovative ways of doing things, which has been incredibly successful. TCS is central to the delivery of the service. You could almost say that TCS is more NEST than NEST! Tim Jones, CEO of NEST