Good administration provides the foundation for all pension schemes to achieve success and meet their objectives. That means it is even more important, in today’s uncertain times, for you – as pension trustees, executives or sponsors – to make sure your pension scheme administration is performing well, meeting the needs of your scheme members and enabling you to deliver against your journey plan objectives.
Why review?
With ever-evolving legislative and governance requirements, changes in the pensions industry are happening fast. Regardless of whether your scheme administration appears to be working satisfactorily, or whether you may have more significant administration challenges, it is crucial to continually review your administration provision to make sure it’s fit for purpose and it continues to meet your needs.
Good administration isn’t and shouldn’t be an afterthought. Don’t forget that members will assess those in charge of pension schemes by the quality of the administration service they receive. The ramifications of an underperforming administrator can be both to the financial and reputational detriment of sponsors and trustees.
So this is why continually reviewing is important, but how do you do it right?
Any formal review should be from a ‘top down’ perspective and should seek to answer the question: is your overall administration model the right approach?
Starting out by asking this question will enable you to assess your overall strategy and whether this is appropriate to meet your long-term goals. You may have an in-house service – yet is this still right for you? Or perhaps you have outsourced to a third-party administrator – but have you outsourced the ‘right’ services? If you conclude that you need to change your model, we suggest that you appoint an expert to help guide you through the process of change.
Asking the right questions
If you are comfortable that you have the right approach, the next stage in the process is to review the service provision within that model. This should happen on an ongoing basis through engagement with your administrator and through various reporting tools (e.g. service level agreements). However, you should also undertake a deeper review – ideally around 12 months before the contract end date – which can help you ‘take a step back’ and undertake a more meaningful assessment of the service you receive. We often conduct administration reviews, benchmark exercises and selection exercises for clients and in our experience, some of the key questions you need to ask during a review are:
- Are you getting the best value for money from your provider?
- Do your members benefit from the latest technology and best-in-class communications?
- Does your administration provider have the tools and expertise to complement your long-term strategy?
- Have they demonstrated resilience through the Covid-19 pandemic?
Taking the time to assess the administration model and making sure that service provision is agile and able to adapt will ensure that you have a robust system that can keep pace with the constantly evolving industry. To know your administration is future proofed and that there is a process in place to continually review, will save many potential headaches in the long run.
We would be very happy to talk to you about the support you are looking for in this area and share insights based on our research and experience of the pensions administration market. You can read more about the services we offer here or contact our experts Chris Holly and Mathew Witherwick.