What can be done to strengthen quality signposts among TPAs?

On the one hand, we have the Pensions Regulator and its third objective: ‘to promote good administration of work-based pension schemes’.

On the other, we have the Pensions Administration Standards Association, a voluntary industry body – both helped and hindered by everything that ‘voluntary’ implies – focusing on the three key areas of defining, supporting and accrediting administration standards.

In the centre though, right at the point where regulatory and voluntary best intentions fail to meet, we have an industry facing a pace of change that has quickly gone from unprecedented to unsustainable.

Factor in the same drivers that were already working on administration quality, rapidly evolving technology and a demand for increased standardisation, and we can see a clear need for consistent and objective quality metrics.

The quality baseline

Progress towards PASA accreditation has been painfully slow so, in the absence of a TPA quality kitemark, how do we know whether providers are turning out a quality product?

Award panels and anecdotal evidence tell very different stories and it is not clear who to ask.

But we should ask, 'if a commitment to quality administration came with objective characteristics, what would those characteristics look like?'

Opinions will vary but the key quality characteristics in a fast-moving industry that relies heavily on both people and processes are a stable control environment, rapid assimilation of new information and high levels of staff retention.

Some of these are tick-box and some are more subjective, but all are essential tools in demonstrating and measuring admin quality.

Peanuts and monkeys

Any TPA not already publishing an annual Audit and Assurance Faculty (01/06) report is falling down on a fairly fundamental test of quality assurance.

These in-depth audits, carried out against standards defined by the Audit and Assurance Faculty, take a hard look at the provider’s control environment.

In an industry dominated by national and even international providers, putting national administration practices under the AAF microscope is invaluable in identifying inconsistencies, inadequacies and local variances in the design and management of administration processes.

ISO 9001 and 27001 cover quality and security management systems respectively and are hard-won accreditations based on both internal and external audit.

The process design and wider education pieces needed to retain these accreditations are two more essential ticks on the quality checklist.  

How firms fare in the ‘peanuts and monkeys’ test is also hugely revealing.

TPA is a high-volume, high-turnover but also highly complex industry.

By extrapolation, any firm with a high proportion of professionally qualified administration staff is demonstrating that it has either invested directly in those qualifications or is willing to invest in recruiting and retaining qualified staff.

With the Pensions Management Institute offering a challenging range of vocational and professional administration qualifications, unwillingness to support professional development should be a very clear warning sign that these key quality characteristics are not being prioritised.

PASA and collaborative efforts

It is an open secret that calls for increased industry collaboration tend to fall on deaf ears, as evidenced by the absolute failure of the industry or the regulator to come up with an enforceable best practice standard governing the transition of administration services between providers. 

Even at the PASA level, it is not unusual for member firms to fall far short of the association’s standards in the course of actual administration, which dilutes the effectiveness of PASA, at least in its current form.

Although the path to accreditation may be slow, at the very least a stated and actual commitment to abide by PASA’s standards in the countdown to accreditation would be a massive step towards improving quality standards. 

Julie Walker is an associate in the pensions administration team at Barnett Waddingham