By the time we’re all settling down with April’s edition of Pension Aspects, we’ll know whether 29th March came and went with a bang or a Y2K sized whimper. At the time of writing though, a large part of the pension administration industry, with pensions to pay to members spread across the EU (and the globe), has to seriously consider whether those 1st April pension payments are going to happen. Maybe we’ll see a barely perceptible blip in the international payments mechanism; maybe we’ll see a collapse in the international banking system; the former feels much more likely, but the key thing is, with just a few weeks to go, we don’t know.

From an administration point of view, otherwise known as ‘the school of hard facts and anxious pensioners’, the current uncertainty is a prime example of how far pension administration has come from that core mission we all sign up to on our day at pensions school; to ‘just pay the right benefits to the right people at the right time’.

Now, we would probably expand the remit to include spin public, regulatory and judicial policy into administrative gold, futureproof for a future that can’t be predicted, and somehow just find a way over, under or around every unintended consequence that drops out of the legislative pipeline.

Starting from the back foot?

The last few years are peppered with examples of emerging external priorities diverting the pension agenda:

  • The earlier part of the decade was spent wrestling to keep clients on the right side of the regulator by keeping data quality pinned to the trustee agenda and designing technology to deliver on the regulator’s demands
  • Set against that background, a global financial crisis, and the absolute lack of any trustee appetite for further data ‘naval gazing’, DB contracting out cessation didn’t just drop into an otherwise quiet Monday. When Barnett Waddingham surveyed on this at the time, 75% of respondents said the pensions industry wasn’t nearly ready for GMP reconciliation on top of the existing TPR challenge. There were clear and justified concerns around the monumental logistical and technological developments needed
  • Layer on the seismic shift from ‘that budget’ into the mix though, and the obscure and convoluted question of DB contracting out fell right off the trustee radar as the whole pension landscape rushed to re-draw itself overnight on the post 2014 model.
  • Etc. etc. etc….

… if we couldn’t rapidly evolve and innovate, the relentless pace of change would be crushing.

Pushing ahead or keeping up?

The problem with the pace of change in pension administration is that there is no ‘pause button’; change is coming from 10 different directions and it all funnels through to our product and how we deliver it. With our industry literally transforming under our feet, if we couldn’t rapidly evolve and innovate, the relentless pace of change would be crushing. Whether, as an industry, we might have chosen to innovate in entirely different directions had the technological priorities remained ‘un-hijacked’, is another matter.

Asked in 2009 where we saw ourselves in ten years, would anyone have predicted UFPLS, flexi-access, Scheme Pays, TPR data scores, GMP reconciliation, tapered annual allowances, or pre-alignment tax periods? Industry insiders will be highly familiar with this far from exhaustive (but still exhausting) list. Industry outsiders should stand back in awe that administration is managing to find a balance between the dual challenges of massive retrospective rectification and enormously expanded future benefit options, whilst also just getting on with the day job. It’s a delicate balance though.

More haste, less speed?

The whole reason the regulator ever needed to throw down the data quality gauntlet was that, historically, data was feeding into systems that weren’t

sufficiently robust. We might have come a long way from salary histories written in pencil on small yellow record cards, but the underlying risk that a solution that looks adequate for now might really just be storing up problems for the future, is hugely amplified when too much has to change too quickly.


By Julie Walker
Associate – Barnett Waddingham


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