Fergus Clarke says it's time for administrators to speak up
For too long administration has been the unheard voice. This is fine when everything is going well, but not when things are difficult, or changes are being contemplated - especially when these changes could adversely affect the administrators ability to perform their services. It is at this point administrators should push themselves to centre stage and make their voices heard. Administrators have a major role to play to support trustees and scheme managers in delivering excellent governance and it is time this was recognised.
Scheme administrators have been undervalued for a long time, but there is a duty on us to change this and take our place at the table alongside pensions managers and scheme advisers. Making our voices and opinions heard at trustee meetings will, ultimately, go a long way to improving not only administration but the strengths of the relationships with schemes and members.
This is even more significant when you consider how prevalent administration issues are at the moment - data security, guaranteed minimum pension reconciliations, the complexities around ‘freedom and choice' including the potential for scamming to name just a few. It is a minefield for schemes, a minefield that could be very costly to negotiate, and good administrators can help trustees navigate through it.
At a scheme level, administrators need to have a voice to if they are to perform their tasks to the highest standards. They need to actively contribute to pension scheme strategy, change agendas and bring their expertise and experience to bear in helping trustees respond to legislative- or scheme-driven changes. They must also develop their staff and enhance their customer service skills to support members as they navigate their way through the jungle of tough decisions they face.
Specifically, the Pensions Administration Standards Association (PASA) encourages administrators to engage in the various consultations and to make their contributions count. This could ensure the measures that are being considered by the Treasury on early exit penalties and transfers, as well as the consultation on changes to tax relief, are capable of being administered and are logical and member-focussed.
The Pensions Regulator (TPR) is proactively championing not only good administration, but accredited administration, so there has never been a better time for administrators to raise their game. In their annual report for 2014/5, TPR states: "We continue to encourage administrators to attain independent accreditation. In a number of publications over the year we have promoted the merits of independent accreditation, including that of PASA to trustees and encouraged them to discuss with their administrators whether they have obtained independent accreditation or plan to do so."
The government has also supported the attainment of independent accreditation such as that offered by PASA and has stated that it may consider mandating accreditation if new defined contribution governance standards do not drive up standards to the desired level.
So administrators need to exercise their vocal chords and support their clients in implementing good decisions and robust administrative procedures. The regulator is encouraging it and the government has created the space for administrators to step up. The onus is on us as responsible administrators - if we don't then we only have ourselves to blame.
Administrators must be sure that the trustees they engage with, whether from an administration, adviser, manager or other professional point of view, have faith in them and their understanding of current issues, future changes and everyday business as usual. This will enable trustees to understand how important administration is. Once this happens, trustees will be able to see what good administration looks like and indeed the consequences of poor administration. This would not only lead to a more effective and sophisticated administration process for schemes, but could also give the administrators the same footing as a ‘trusted adviser' that is enjoyed by scheme consultants.
Fergus Clarke is a member of PASA's board
Defined benefit (DB) schemes that provide GMPs must revisit and, where necessary, top-up historic cash equivalent transfer values (CETVs) that have been calculated on an unequal basis, a landmark court judgment said last week.
Technology platform PensionSync has partnered with quantum employment pioneer My Digital to help contractors and employers manage pensions as more workers do temporary work for multiple firms.
Capita Pensions has partnered with data technology solutions firm Intellica to tackle the GMP equalisation challenges facing pension schemes.
The Hewlett Packard Retirement Benefit Plan has reappointed EQ Paymaster as its third-party administrator (TPA) for five years.
Schemes and their administrators have rightly received much praise for ensuring that pensions have continued to be paid in full and on time during an unprecedented period of disruption.