For evidence of just how fast moving the pension administration world has to be we need look no further than the last decade: a period marked by the competing priorities of regulatory, commercial and technological forces. Set against a background of global economic uncertainty, a bombshell budget, and a fundamental rethink on the whole concept of retirement saving), this decade of constant change has driven the industry forward. Pension administration has become increasingly diverse and specialised. Where previously, pensions evolved at a relatively sedate pace, since the launch of pensions simplification back in 2006, the landscape has transformed and the successful administration service has had to keep up accordingly.
De-risking is a prime example. In the current climate, as trustees seek to successfully explore and implement the array of liability management exercises available to them, there is an ever-increasing need for a wider skill set and a broader range of experience within organisations. Options such as enhanced transfer values and pension increase exchange exercises, things that would have been few and far between in the past, have become commonplace, and companies are having to adapt to providing these services as a matter of course.
More recently, pension freedoms have generated a whole host of additional challenges. The options available to members have now increased to such an extent that almost every case needs guidance through the myriad of complex options available, be they enhanced options available under a defined benefit scheme or the multiple uses of a DC pot. As a result, member education has become increasingly important and we are all looking for ways to increase member engagement at the earliest opportunity. With an increased shift towards member selfservicing, the availability of on-line servicing tools provides the perfect platform to both engage and educate members whilst providing trustees with the added value of freeing up time and resources to devote to ongoing improvements in their service delivery.
We’ve also seen pensions liberation work its way higher and higher up the agenda. With the potential loss of retirement savings at risk from unscrupulous companies making attractive, but ultimately disastrous promises to unsuspecting members, there has been a marked shift of emphasis towards an increasingly forensic approach to due diligence. With all of this happening alongside the increased transfer activity generated by pension freedoms, these have been testing times for trustees and administrators.
Last, but by no means least, we have the ceasing of contracting out, and the subsequent task of reconciling GMPs, which continues to remain high profile as the impending cut-off date appears on the horizon. This has remained labour intensive across the board but has also created opportunities to develop a whole new level of automated data interrogation and rectification technologies.
The world of pensions never stands still, and with the advent of GDPR, and increasing focus on data quality, we can expect as many changes to come over the coming years, providing many new and exciting challenges for providers to prove their expertise and long-term commitment to the sector.
By Sarah Scully