Trustees are being urged to broaden their assessments of administrators as part of the Pensions Regulator’s (TPR) new guidance on administration functions.
The revised guidance follows TPR’s market report into the admin sector, after a lengthy period of engagement with some of the biggest providers. Despite progress on raising standards in several areas, the regulator has previously raised concerns about governance, technology, data, and resilience.
New considerations include the importance of robust oversight arrangements for internal and external administrators, and a recommendation to broaden performance measurements “beyond time-based commitments” to ensure a “true reflection of the quality and accuracy of the administration service”.
Trustees and scheme managers remain accountable for administration – even when tasks are delegated.”
Julian Lyne, The Pensions Regulator
Quality of service is expected to be a significant part of the forthcoming Value for Money framework for defined contribution pension schemes.
On top of this, the regulator included new guidance on IT system governance, including oversight of technology, backups to systems and data, and change control processes. It also reiterated its previously issued guidance on cybersecurity.
TPR’s executive director of market oversight, Julian Lyne, said: “High-quality administration is fundamental to delivering good outcomes for savers. Our updated guidance sets clear expectations for schemes and administrators to work in partnership to strengthen governance and ensure resilience in the pensions system. Trustees and scheme managers remain accountable for administration – even when tasks are delegated.
“We expect schemes and administrators to refer to this guidance regularly to ensure they are following good administrative practices. For example, it provides important information on maintaining an administration IT system and signposts trustees to TPR’s cyber security guidance.”
TPR’s full revised guidance can be found on its website.
A ‘pivotal moment’
In a press release, the regulator said it was a “pivotal moment” for the pensions industry amid significant change.
“Administration, once seen as a back-office function, is now recognised as a critical driver of good outcomes for savers,” TPR stated. “With increasing regulatory change, rapid technological transformation, and rising member expectations, the role of administrators has never been more important.”
The guidance also specifically referenced the Pensions Management Institute’s (PMI) qualifications and the Pensions Administration Standards Association’s accreditation process for administrators. Both were given as examples of ways in which trustees can “establish that your administrators are sufficiently experienced and qualified in administering your type of scheme”.
Helen Forrest Hall, chief strategy officer at the PMI, said: “We welcome TPR’s updated administration guidance, recognising that it now applies across all scheme types and places greater emphasis on assessing performance beyond traditional service-level agreements. The strengthened focus on robust member communications, data governance, and IT oversight is fundamental to good pensions governance.
“The PMI is proud to be working closely with industry through our Industry Administration Working Group to help schemes meet these wider expectations and to share good practice from across the sector. We look forward to sharing this latest guidance with members as we continue to embed the highest standards of professionalism and support better, more secure outcomes for savers.”
