Is your current pensions administration service about to fall over, and you just don’t know it?

Spotting the signs before it is too late...

Small and constant changes to frontline pensions administration services are increasing risk for pension schemes and trustees. The risk can be reputational or service related and are risks which trustees are increasingly needing to address.

The number and complexity of one-off projects facing administrators is increasing while business-as-usual tasks need to be delivered at the same time. These one-off projects could be bulk settlement transactions or individual member option exercises. New at-retirement options for members and online portals enhance member experience but also still require background support. This comes against the backdrop of senior administrators retiring or otherwise leaving their jobs, and a general skill shortage.

The industry is already at boiling point. Then comes GMP equalisation. This involves a process to adjust old statutory pension benefits. And if that wasn't enough, there are also the new requirements for members to receive Pensions Dashboards.

On GMP equalisation. It is hard to believe that a decision from a legal ruling over 30 years ago is having such a profound impact on the overall pensions landscape today. Most administrators are reporting that it will take two to three years to clear this work. They are still also tackling GMP reconciliation and rectification.

Administrators must also accelerate their preparations relating to the Pensions Dashboard. A large volume of data cleansing activities, digitisation of data and automation will be needed.For many administrators, these needs may not have been fully assessed and built into current planning. Data for the majority of schemes must start to be available by June 2023. This sounds a long way out but with the average scheme needing around 12 months to get there, how is this being completed alongside business-as-usual and other one-off projects? Progress needs to be made quickly.

It’s no wonder we are seeing a pick-up in queries from trustee boards and their executive teams, wanting to assess the resilience of their current Pensions Administration service. Some have noticed the temperature rising and want to avoid finding themselves in boiling water.