Administration transfers: Do not let one partner step on the other's toes

To help with the process the Pensions and Administration Standards Association has produced a code of conduct for administration provider transfers. This asks both sides of the transition – the ceding and new administrators – to act professionally and collaboratively and to focus on the project itself, rather than just the commercial aspects. Think of the two third parties as partners in a ballroom dance – they should work in tandem, with one party always leading.

Instead of fretting about the risks, trustees should get a great sense of satisfaction from completing the process on time and to a good standard

Hopefully your agreements with both parties follow the Pensions Management Institute’s guidance, so preparing to transition shouldn’t be a shock for your incumbent administrator – they will, though, be expected to have a plan to help you move on at the point it is required.

It is these two parties working together that delivers the synchronised, ‘two-step’ aspect of this process. Instead of fretting about the risks, trustees should get a great sense of satisfaction from completing the process on time and to a good standard, allowing them to enjoy the excitement they will be feeling about working with a new provider.

New admin must own process

Project management is among the key topics that should be discussed prior to a transfer. While each party should have their nominated project ‘lead’ to ensure accountability, it makes sense for the new administrator, who will be committing more resources to the transition, to ‘own’ the project and for the ceding administrator to provide assistance.

But project management is about more than just jobs and dates; the opportunity should be taken to agree roles and responsibilities too. Compiling and agreeing a plan should be a collaborative process with trustee representation throughout.

It is also important for there to be regular, two-way dialogue throughout the project too. It is not just for the new administrator to ask for updates; the ceding administrator should take a proactive approach, updating other parties with progress of their actions.

Poor communication is often a reason for projects not progressing to plan, so ensuring there are regular touchpoints will help keep projects on track and allow for any adjustments needed to be made in a timely manner.

Trustees should speak up on data standards

The new administrator should also lead on the provision of data and information; they will know what they need to receive in order to complete the transition correctly. Trustees should not be passive though, and there should be an opportunity for them to review the information request to see what information they are able (and would like) to provide – with the motivation likely to be around potential cost-saving in relation to the transition fee they are paying the ceding administrator.

Both administration parties should expect to ask and answer questions in relation to the data and information received, in order to ensure the new administrator is prepared with a robust understanding of the scheme. A process for raising questions and tracking responses needs to be agreed early on, alongside expected timescales for responses.

It is likely in this regard that the ceding administrator will dictate the approach, and their main responsibility will be to ensure enough resource is allocated to answering questions as and when they are received.

Ceding admins cannot walk away

It is important to remember that members are at the heart of the service delivered, and equally the most at risk during a transition. Gaining a commitment from the ceding administrator about maintaining performance standards through their remaining term and specifically during the blackout period is crucial. Similarly. understanding how a new administrator plans to be resourced to deliver a high-quality service to members from day one is just as important.

The provider transfer guidance sets out expectations on exit fees, basically saying they should be reasonable and appropriate. There should be a contractual mechanism for the ceding administrator to propose costs for agreement by the trustee, typically within an exit agreement.

With careful planning there is no reason to assume there would be a problem. But it is a fact of life that plans do not always go to plan. This may be due to cost or to delivery issues, so it is worth noting that the dispute resolution service offered by PASA provides a mediated avenue to resolve issues when they may arise.

To finish, make sure your administrators – both old and new – know their steps and have their transition dance routine choreographed. They need to show a willingness to work together as a partnership – you cannot have two people leading, otherwise there will be squashed toes.

David Pharo and Chris Tagg are both directors on the PASA board