Regulator to police administrators?
The Pensions Regulator (TPR) may soon turn its focus to administrators.
Nausicaa Delfas hinted heavily that TPR might get more involved in policing them during her speech at thePensions and Lifetime Savings Association’s conference this month.
The chief executive of TPR said: “People trust you with their money, either to deliver the highest return possible or what’s been promised to them. You can only do that by being properly run with the highest administration standards.
“While data management plans are widespread among larger schemes, fewer than a third of micro or small schemes have one in place. And that tells me that too many trustees and administrators are failing in their most basic requirements, let alone harnessing the possibility of harnessing technology to provide real benefits to savers.”
She added that TPR began engaging directly with third party pension administrators earlier this year.
She said: “Already, we are starting to stretch the limits of our powers and striving to deliver good saver outcomes. Last January, we started formally engaging directly with third party pension administrators, recognising the critical role they play in the pensions ecosystem. Following a successful pilot, we now have this as a permanent part of our approach to regulation, working with administrators who represent around nine million members and 1500 schemes, understanding risks and driving improvements across systems and processes, cyber resilience, data quality, trustee focus, member engagement and dashboard readiness.
"I will be pushing my team to think carefully about who else in the sector has a role to play in delivering good saver outcomes and encouraging innovation in our regulatory approach to make sure that they act in savers’ interests.”
PMI backs Starks report
The Pensions Management Institute (PMI) said it supports the regulation of pension scheme administrators as outlined in the Department for Work and Pensions’ Starks Report.
While the report was commissioned in order to ensure that TPR remained fit for purpose, it also noted in its recommendations that ‘there is a case for considering regulation of pension administrators, who are currently outside TPR’s remit.’
Commenting on the Starks report, Robert Wakefield, president of the PMI, said: “It is encouraging that the Starks report recognises the crucially important role played by administrators. Professionally qualified administrators play a vital role in ensuring that members’ benefits are calculated correctly, and that important information is communicated to members in a clear and timely fashion. We believe strongly that any regulation regime should be based on high workplace standards achieved by those in key roles evidenced by appropriate industry qualifications.”
Commenting on what changes could be made to the way administrators are regulated, Wakefield said: “There are different options that could be considered here. Regulation could be applied at organisation level, with those bodies engaged in pensions administration required to comply with predetermined standards. However, a more effective approach would seek to professionalise pensions administration by requiring individual administrators to demonstrate professional competence through the completion of appropriate qualifications.”
Admin under the microscope
This focus on administration has been prompted by a number of admin-related issues which have arisen of late, according to Stuart Reid, past chair of Society of Pension Professionals’ (SPP) administration committee.
He said: “In recent times there have been a number of high profile issues relating to pensions which have received coverage in the mainstream press. When the public then wants information about how such issues affect them it is the administrators of their pension schemes that they turn to, which raises the profile of pensions administration with the general public, highlighting the good and sometimes the not so good aspects of the discipline.
“The administrator is the point of contact members have with their pension schemes, therefore the experience a member has during that contact will influence how they feel about pensions more generally.”
