Importance of good administration
In a blog posted on the regulator’s website, TPR Interim Head of Relationship Supervision, Front Line Regulation, Cliodhna Judge, noted that unforeseen challenges including COVID and cyber leaks, as well as new policy initiatives such as Pensions Dashboards, had once again put “the importance of good administration back in the spotlight.” While Judge did say that pension scheme trustees are the first line of defence for savers, she stressed that administrators also have “a crucial role to play” in this area.
Why is the regulatory approach changing?
The blog states that TPR has therefore decided to adapt its regulatory approach in order to work “more closely with administrators” by establishing open, two-way relationships with a number of “strategically important pension administrators.” Judge emphasises that good quality data is the “bedrock for a well-run pension scheme,” being key to improving the accuracy of annual benefit statements, valuations, and membership data.
She goes on to say that administrators are “integral to this,” and that is why the regulator wants to explore how trustees and administrators interact. By engaging directly with administrators, TPR hopes to identify any barriers that exist and better understand what makes for good and poor administration so they can respond to issues as they materialise.
Building two-way engagement
In January 2022, TPR created a new team dedicated to engaging directly with third-party pension administrators in a bid to extend the regulator’s reach and influence. This Administrator Relationships function has now completed an initial pilot study with a voluntary administrator, exploring potential risk areas and the level of burden the approach might have.
Judge said that results from the pilot showed the engagement was perceived as being “mutually beneficial,” with feedback from the administrator suggesting the approach was ‘productive and collaborative, and not simply a tick box exercise.’ The pilot was also deemed to have worked well for the regulator, enabling it to gain a more thorough understanding of current market challenges.
Discussing topics, concerns and future changes may work best on an informal regular basis. This could offer improvements if both the regulator and administrators engaged, rather than implementing formal regulation.
Developing a stronger insight
Since the pilot, the regulator has been exploring a wider set of focus areas with more third-party administrators. These include data quality; systems and processes; trustee focus; member engagement and communication, and pension dashboard readiness. TPR estimates that its work now covers around 10% of the pensions administration market, representing nine million members in 1,500 schemes, and the regulator is looking to further expand this reach.
TPR also believes these initiatives have enabled it to learn more about the challenges and issues third-party pension administrators regularly face. Judge concludes her blog by saying the insight gained by the regulator is helping “support and influence the administration industry to make improvements to standards, build confidence in the pensions system and ultimately protect savers.”
Industry welcomes comments
The industry body tasked with promoting and improving the quality of pensions administration services in the UK has welcomed TPR’s comments. Kim Gubler, Chair of the Pensions Administration Standards Association (PASA), said the PASA is “fully supportive” of the regulator seeking to support better administration standards. She added, “Our whole raison d’etre has been about raising standards to improve outcomes for pensions savers. Administrators are striving to introduce greater efficiencies through better underlying data, use of technology and customer service.”
Specialists in pension administration
EQRS welcome the opportunity to work more closely with the regulator to discuss the evolution of the pensions industry and how to drive this forward whilst also building the public confidence in pensions. This needs to be a 2-way conversation, allowing administrators to raise concerns and worries about forthcoming changes and observed trends as well as being kept informed of upcoming regulatory changes that may impact in them and their operations.
Specialists in pension administration
EQRS welcome the opportunity to work more closely with the regulator to discuss the evolution of the pensions industry and how to drive this forward whilst also building the public confidence in pensions. This needs to be a 2-way conversation, allowing administrators to raise concerns and worries about forthcoming changes and observed trends as well as being kept informed of upcoming regulatory changes that may impact in them and their operations.
EQ are pension management experts who have been supporting pension scheme administrators, members, managers, and trustees for over 187 years. With technology at our core, our pension platforms can support clients with all their pension scheme administration needs.
Sources:
https://www.ipe.com/news/uk-pensions-regulator-to-build-on-relationship-with-admins/10068895.article
https://www.pensionsage.com/pa/TPR-to-up-its-efforts-with-pension-adminstrators.php