Smartphones, touch screens and voice-assisted technologies like Siri and Alexa are transforming our lives. As people rely more on machines to help manage their daily activities, the business environment has evolved rapidly to match the changing expectations.

The pension industry is no different. While plan participants expect their retirement accounts to be secure and easily accessible, plan sponsors face increasing pressure to lower costs and improve business processes.

With emerging technologies, such as the advent of blockchains and artificial intelligence, the pension industry now has the opportunity to transform routine processes and keep pace with how participants act, interact and transact digitally in their daily lives.

Leveraging the blockchain

Blockchains create a virtual ledger that lets a network of trusted participants transact directly without requiring third-party verification. In the pension industry, it has the potential to drive industry-wide improvements, such as establishing secure digital participant identities, reducing paperwork and improving routine tasks and transparency.

The blockchain’s use of secure digital identities could eliminate several pain points. Plan participants who maintain retirement accounts with former employers have to keep track of multiple accounts or may even lose track of an existing one. For the plan sponsor, tracking down participants requires immense effort, costing time and money in searching various databases.

Read: Pension industry hamstrung in efforts to find missing plan members

Blockchain technology can provide a cost-effective solution for establishing verifiable and portable digital identities, helping participants track retirement accounts seamlessly when changing jobs or retiring. Digital identities can be easily authenticated, and participants retain the ability to control shared information. Employees changing jobs can access their pension data easily using their digital identity, which stays with them forever. Plan sponsors can use blockchain ledgers to establish trust and transparency when verifying a participant’s digital identity.

A similar concept is already in use in Canada. Toronto-based SecureKey Technologies Inc., an identity and authentication provider, is developing a digital identity network using blockchain. Like payment networks — where one credit card can be used anywhere — the company is creating a triple-blind identity model allowing consumers to use account login credentials for financial institutions to access government services.

Read: How do Canadian executives see the future of pensions and benefits?

The implications are significant. By using secure digital credentials that participants already own, they can share and transfer secure information, such as passwords, not just with plan sponsors but other businesses as well. The idea of using one ID to share information across multiple businesses can eventually lead to eliminating multiple passwords. It’s definitely something to look forward to.

Managing and storing a large number of contracts and service agreements — with their multi-party reviews and signatures — has long been a challenge for pension funds.

By tracking and time-stamping document review, blockchains can ensure the most recent versions are used. Required parties sign documents digitally, and blockchains control access to specific data as needed.

Read: Sustainable investing on cusp of a renaissance

All plan sponsors also have the arduous process of authenticating and tabulating proxy voting. Collecting proxy votes manually is time-consuming, expensive and makes auditing at the individual level complicated.

With distributed ledger capabilities, plan sponsors can see vote progress throughout the issuer’s proxy voting period. By assigning each vote a control number, it’s possible to audit electronic voting on an end-to-end basis. With the results centrally and securely stored, plan sponsors benefit from lower costs, more transparency and improved efficiency.

Artificial intelligence

Artificial intelligence is a catch-all term for machines performing human-like activities. From automating routine tasks to making recommendations based on behaviour patterns, artificial intelligence and its subset, machine learning, offer many benefits for pension funds. By mining vast data troves, it can help understand and predict financial behaviour and aid investment decision-making.

Online fraud and other scams are pervasive. With machine learning, it’s possible to anticipate and prevent fraud by analyzing and monitoring risk in real time. Machine-learning tools can verify identity, authorize payments and set account limits. In addition, these tools and applications can replace high-maintenance, rules-based fraud management with self-learning algorithms to identify new patterns. They can also learn to discover exceptions, breaches of regulations, market abuse and non-compliance.

Read: Why you should hire a chief automation officer

Artificial intelligence and machine learning can process vast quantities of financial data, which plan sponsors can use to monitor stock market trends. Using that information, plans can offer financial advice tailored to an individual’s unique risk and tolerance profile. It’s also possible to automate routine tasks such as rebalancing trades, monitoring risk and ensuring compliance. And by scheduling reminders about deadlines and tax strategies, plan sponsors can encourage participants to take an active role in their retirement accounts.

With people living longer, the pension industry can make the retirement experience more meaningful. Emerging technologies such as blockchains and artificial intelligence can transform the pension industry by improving routine business processes while staying responsive to the evolving needs of participants. The possibilities are endless.

Arti Sharma is head of Northern Trust Canada.

Copyright © 2021 Transcontinental Media G.P. Originally published on

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See all comments Recent Comments


It was a good article, but I only have two comments. 1) Blockchain is one word. 2) There should be some discussion about how blockchain only works if everyone else is on it, because if not, the whole being a DLT thing is undermined and it serves half of its point.

Thursday, July 27 at 8:28 pm |


To address the other comment, “Block chain” was formerly how it was shown on paper. Recently, Blockchain has become a single word.

To address some points in this article;

“Block chains create a virtual ledger that lets a network of trusted participants transact directly without requiring third-party verification”

This is largely inaccurate with respect to how Blockchain as a technology operates. Blockchain does not create a virtual ledger, but rather it is in and of itself a virtual ledger. Further, Blockchain does not function as a data infrastructure for trusted users, key word here being trusted. It is comprised of all users active in a digital ecosystem, whatever the nature. Decentralization is precisely what Blockchain was created to accomplish, and has been achieved through a system centered around third-party members (miners) independently verifying the data blocks which feed into the ledger only after all verifications are in agreement. It is of course important to note that these miners are incentivized to perform block verifications strictly by maintaining 100% accuracy in the validation of data integrity, and collusion would be harm rather than benefit these miners. That said, your mentioning of no third party verification is quite misleading.

Overall, very interesting to see Blockchain develop and its applicability be recognized across several sectors and financial areas.

Friday, July 28 at 10:47 am |

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