Barnett Waddingham’s Paul Latimer considers the year ahead
1) What is Barnett waddingham's admin focus for the next 12 months?
Taking Covid-19 out of the equation, we were already looking at a full slate for the next 12 months. The courts have given us GMP equalisation, the regulator is pushing reluctant adapters to take a hard look at their data quality, and proactive endgame planning is starting to be a regular item on the trustee agenda.
At Barnett Waddingham we were going into the year from a great position. Our people have rated us as a Best Companies Sunday Times Top 100 employer. We are the most highly rated third-party administrator (TPA) in the 2020 Professional Pensions administration survey and we achieved gold awards in all 16 IIC categories. Some of our larger competitors are withdrawing from the administration-only market, and some of those firms are merging, so there is a need for TPAs like us to step up and offer a valid service to the trustees of the much larger pension schemes.
Then came lockdown. Overnight, the world's priorities changed and business plans had to adapt. GMP equalisation, the data quality challenge and the endgame agenda are all still in play, but we also need to adapt to the realities of where 2020 has taken us as the ‘new normal' for post-lockdown working emerges.
Looking ahead to the next 12 months, our focus is on delivering infrastructure and forward-looking digital solutions for clients. In tandem with this, we are also looking at widely flexible working arrangements that put our people's well-being at the centre of everything we do.
2) What are the biggest opportunities and challenges facing admin at the moment?
Our biggest opportunities and challenges are two sides of the same coin. Covid-19 has been a transformative time for the admin industry and part of that has been through widespread collaborative engagement both between the key providers and between providers and the regulator. This creates a positive environment for open discussion and collective agreement around what best practice should look like.
We're also seeing an active focus from the regulator, the Pensions Administration Standards Association and the Financial Conduct Authority on governance, raising standards and getting the best outcomes for members. This becomes more prevalent as trustees look to consider what choice they will have in the TPA market in the coming years. Are TPAs investing for the future?
3) How has Covid-19 changed the way administrators operate?
Regardless of how well prepared any organisation has been, the early days of lockdown were hugely worrying and disruptive for everyone. None of us expected to combine work with childcare, home-schooling, elderly relatives, financial pressures, loneliness, social distancing, frustrated teens and competition for broadband access in crowded homes full of worried but working people.
'None of us expected to combine work with childcare, and competition for broadband access'
For us, lockdown Phase 1 was about logistics - the who, what, when, where and how. Recognising that the usual service-level agreements might not hold up, we reviewed all areas of administration work, categorising everything on a priority scale to allow us to focus on the core activities (retirements, payrolls, pension increases, death benefits etc) members would be relying on. Again, we started from a strong position since we have the benefit of fully integrated UK-based proprietary systems, all of our staff are laptop users and we already embrace homeworking.
Phase 2 developments are about planning for a future that includes accelerating member online service rollouts, which we did for all of our schemes. We have also introduced secure document exchange facilities, automated ID verification, remote printing solutions, and electronic approval processes.
4) What are the most common admin demands from pension scheme clients?
Unsurprisingly, the number one demand for 2020 is for innovative digital solutions and member online self-service options that drive intuitive member engagement. Looking at the bigger picture, pension schemes are under pressure and clients are looking for ways to deal with challenges such as risk transfer and increasingly sophisticated member expectations.
Particularly on the risk transfer side, clients want options for their de-risking journey. As recently as five years ago, even partial transfers or retirements were relatively unusual. Today, we're seeing much more demand for pension increase exchange exercises, buy-ins, buyouts, longevity swaps and non-traditional retirement options.
As you'd expect, trustees and sponsoring employers also want to see the back end of those GMP projects, certainly reconciliation, followed by rectification and then onto equalisation and/or conversion as soon as is possible.
Paul Latimer is partner and head of pension administration at Barnett Waddingham