With schemes facing more administration tasks than ever, it is important the industry attracts new talent to help with potential capacity problems, says Kim Gubler.
Most people who have anything to do with pensions administration understand good administration is delivered through a combination of quality systems, processes, and people.
When I started in pensions, there was no such thing as a pensions administration system - yep, it was that long ago! Quality administration was dependent on knowledgeable pension administrators - they located the member's paper file, calculated the benefit, and drafted any communications.
As the decades passed, administration platforms were created and have since continued to evolve beyond recognition - from basic databases with simple calculation functions to the sophisticated relational structures we have today. Indeed, there will be times when an administrator isn't even involved; bots are beginning to integrate with these modern systems to run straightforward automated calculations and processes.
There's been a huge amount of discussion on the evolution of processes, platforms, apps and enriched web capability but how much has been said about attracting, retaining, and developing great administrators? Maybe people believe if automation is the way forward, we don't need people with good administration skills. It will come as no surprise to you that I wholeheartedly disagree!
Pressure on administration is higher now than ever before. Administrators don't just need to make sure schemes are run smoothly and within their service levels, they also need to deal with the projects flowing from data cleanse, GMP rectification and preparation for buyout. The administrative resources needed to deal with GMP equalisation are as yet unknown and that doesn't even take into account the regulator's crackdown on poor record keeping and dashboard requirements.
With so much on the agenda relying on administration delivering, trustees should take a long term strategic view on their schemes' administrative needs - including the obvious (data, GMPs etc.) and the not so obvious, such as FROs). They should work with their administrator to understand the resources their projects need and their timing, as well as any system changes required. Be warned! Compromises might have to be made along the way to make sure deliverables are met.
I've witnessed the commercial administration market changed beyond recognition. Corporate activity and restructures have meant some administration providers have faced issues with recruitment and retention of talent.
According to Zatori Consulting founding partner Martin Wigfield, a member of the Pension Administration Standards Association: "In the last four years many firms have been under pressure to recruit senior administrators on a like-for-like basis. Plugging gaps rather than growing their own talent." He says it has moved from a traditional buy-side market to a skills-led market, where recruits can choose the employers offering them flexibility and opportunity rather than just money. Other recruiters have said there are still plenty of contract opportunities and the people to fill them, this can be expensive. To address this, several third-party administrators and larger schemes have invested in the Pensions Management Institute's apprenticeship programmes and graduate training schemes, as well as their own ‘home grown' talent projects.
Some would say we are risking a capacity crisis - that there'll be too many schemes with too many projects needing administration input and not enough skilled resource to spare. Some might even say we're already in a capacity crisis. Whether you think we've reached tipping point yet or not, we must ensure the industry has a plan for attracting and developing new talent.
It's short sighted to just recycle experienced administrators when pensions administration is probably at its most critical point. Technology alone can't deliver - it needs engaged skilled people to manage the processes and run the technology so administration can deliver a quality service to members.
Kim Gubler is chairwoman of the Pensions Administration Standards Association and director of KGC Associates
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