A growing number of schemes are looking at ways to address their admin challenges. Heather Quelch says consolidation could be one option to consider
There is plenty of anecdotal evidence that many defined benefit (DB) pension schemes are dissatisfied with the levels of service they receive, even on core elements including administration. And just because it is anecdotal doesn't make it meaningless.
The difficulty in running a profitable DB admin business has seen some providers rationalise their service offering, closing sites and redistributing resource.
This, added to recent consolidation among administrators, has contributed to a lack of capacity, restricting choice and making it very difficult for a scheme that feels it isn't getting the service it wants to find an alternative.
Some schemes have considered using consolidators like DB master trusts not only to move to a complete service provider, but also to improve levels of administrative support the scheme wants for its members.
An attractive proposition
If staying put with an existing provider is not an option, schemes must find one that can meet their requirements.
Moving to a DB master trust to fix a problem with your administration may seem extreme - a little like changing a tyre that is only in need of a little air - but some of these frustrations are long held and things don't seem to be getting any better.
Under those circumstances it is easy to understand why some might consider looking at consolidator options, whether through existing providers or new entrants, as a one-stop shop for their scheme. However, schemes must be wise to a degree of risk in making such a move and ensure that they consider all elements of the proposition, not only the economies of scale and efficiencies gained from the administration.
Bigger, faster stronger
That said, a DB master trust or consolidator could offer small to medium schemes the opportunity to punch above their weight in terms of accessing the latest innovations and standards at a reasonable cost.
- Schemes want - indeed need - better digital support for their members. Online isn't just about saving paper, but goes to the heart of building member communications in the 21st century. People expect to have access to data when they want it and schemes must begin to use more effective, digital first strategies if they are to increase - and improve - member engagement, the holy grail of every scheme.
- Improving data quality relies on data not only being held correctly but also consistently, particularly with the pensions dashboard starting to pick up pace again. The Pensions Regulator has already indicated it is losing patience with the stragglers in the move to drive up standards.
It not only rains…
For many schemes, administration may be approaching a watershed. No longer can they allow it to trundle on as it has in the past, particularly if it is considered to be sub-optimal.
If that is the case, how sure are you that your administration is an arena in which your scheme can hold its head high?
Heather Quelch is head of pensions administration at TPT Retirement Solutions
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