UK - Increasing numbers of DC schemes are outsourcing their pensions administration, Jardine Lloyd Thompson says.
Pensions administration director Malcolm Reynolds told delegates that a frequent catalyst for outsourcing was when key administration staff left. But he said there were fewer opportunities for DB scheme administration to be outsourced as the market was more mature.
He added that a lot of activity was being seen in insured administration – the biggest area of growth in outsourced administration.
He said benefits of keeping administration in-house were:
- Strategic control exerted by a business over the types and standards of services offered.
- Helping to maintain a company’s corporate identity.
But Reynolds stressed that outsourcing also brought benefits, including service level guarantees, core competence, flexibility, removal of resource constraints and the ability for management to focus on core activities. He said a lack of in-house skills was the most common reason for outsourcing.
He added that some pension funds were looking to obtain the best of outsourcing and in-sourcing pensions administration by “co-sourcing”.
Reynolds said this was most successful where administration systems could be shared.
The Competition and Markets Authority (CMA) has published three working papers as part of its investigation into the investment consultancy and fiduciary management markets.
In this week's Pensions Buzz, we wanted to know whether contract-based, trust-based or a master trust arrangement would be best for a new defined contribution (DC) scheme.
This week's edition of Professional Pensions is out now
MPs failed to place legislation into the Financial Guidance and Claims bill that would have made pension guidance default, which Just Group director Stephen Lowe said left a "bitter taste".