UK - BP's decision to take scheme administration back in-house is not the start of wholesale moves away from third-party providers, experts claim.
But consultant Dunnett Shaw says it is undeniable that a handful of schemes are reinstating their own administration departments.
Dunnett Shaw managing director Jocelyn Blackwell said “control and flexibility” were the two main reasons schemes would look to in-source. And she knew of at least four other schemes that were currently in the process of bringing admin back in-house.
Blackwell has been actively involved in setting up BP’s in-house pensions administration department, which will be up and running by June 2004.
She said: “It’s not a trend to go back in-house but in terms of BP, it has the fund size to justify it – and it is continuing the DB scheme.
“If you are a company like BP – which is fairly inquisitive – it is a lot easier to control things from within the company than make an outsourced provider do it for you.”
The oil giant closed its pensions department and outsourced the administration function to Aon Consulting 10 years ago.
But it decided not to renew the administration contract which expires in June 2004.
BP programme director Graeme Roy explained that “things have gone a full circle” over the past 10 years.
“There’s much more of a business focus on pensions, investment and administration. BP wants to take more of a controlling interest in pensions and seek ways to improve customer service.
“It’s difficult for a third party to deal with the type of flux we have at BP – to respond to change and augment customer service levels accordingly.”
The new administration unit – based in BP’sSunbury-on-Thames site – will have around 50 employees. It will be staffed with people from Aon’s current operation, people from within BP and some external hires.
Roy stressed that the relationship with Aon during the transition had been very good.
BP’s administration department is being fitted with Aquila’s “administrator” system, and will be up and running before June next year.
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