Administration has often been viewed as the poor relation of the pension services available to Trustees. In football terms, we’re used to being like the referee – you need to have us to be able to play the game, but we only really get noticed if we do something badly.
A few years ago, around the first time GMP reconciliation began to cause havoc, the importance of good quality data in ensuring good outcomes for members started to be recognised. The administration service started to get more deserved recognition and a greater share of the trustee meeting agenda.
And now we all appear to be getting very excited and perhaps going too far the other way. Rather than simply carrying out instructions within a specified timescale, there is an increasing reliance on administration teams to interpret, implement and inform. This in turn is creating a bottleneck of issues which is a challenge for administration departments across the industry. And I’m wondering whether the shift of responsibilities has gone too far?
I attended two face-to-face pension conferences over the last week. It was great to re-engage with industry colleagues to discuss the issues of the day while taking care not to drop a precariously balanced tray of food, a cup of tea and a free Target rucksack. However, I left both with the overwhelming feeling that the phrase ‘ask your administrator about how this will happen’ is now the stock response to regulatory and behavioural changes within the industry.
The presentation talks where administration was front and centre included:
- the governance and oversight of pension scams (which includes the difficulties of abiding by the new regulations while keeping members happy at the same time),
- ensuring data is clean and accurate ahead of the implementation of the pensions dashboards and then managing the requests that result from it,
- ensuring our inclusion and input in any de-risking exercises,
- reporting to clients on more than just SLA’s (future blog incoming),
- ensuring GMP reconciliation and equalisation exercises are completed and implemented correctly with minimal additional ongoing costs, and
- allowing members to educate us in order to personalise communications to increase engagement.
Administration is crucial to all of these projects. Of course it is. But most administration firms have a level of resource designed to successfully manage day-to-day work and a small number of ad hoc projects, and the need to add qualified or experienced individuals to cope with the increased burden is proving challenging. I fear we are in danger of overloading our administration teams with so much additional work that having the time to explain entitlements and actually paying a members pension, accurately and on time (which is ultimately why we’re all here) becomes secondary to the reams of complex and time-consuming work being pushed the administrators way.
It is crucial that over the next few months trustee boards and scheme managers engage with their administrators, discuss work volumes / priorities openly and honestly, and agree a clear plan for these exercises with realistic timescales. One presenter stated that “administrators need to be brave, explain to their trustees the amount of work that they have coming up and the challenges they face, and agree how best this can be managed”. Trustee boards may also need to be brave and review how they can work with their administrator to ensure we all come out of this incredibly busy period unscathed. And then I’ll be very happy to return to being your favourite referee.