Administration providers should be subject to minimum standards, accreditation requirements, and risk management frameworks to raise standards and support member outcomes, according to the Pensions Administration Standards Association (PASA).
PASA – which has developed a set of standards and an accreditation process of its own over the past few years – made the recommendations in its response to the Department for Work and Pensions’ consultation on trusteeship and administration, which closes tomorrow (6 March).
Any new regulatory framework for administrators should include standards for cybersecurity risks and continuity planning, the association said, as well as supporting providers as schemes consolidate.
“Stronger oversight, tiered expectations, credible continuity planning, and structured exit frameworks will be essential to protect members and maintain confidence.”
David Fairs, PASA
David Fairs, PASA’s chair, said the consultation was “an important opportunity to strengthen governance in a way that recognises the central role of high-quality administration in delivering saver outcomes”.
“Administration risk is operational risk,” he continued. “It involves data, systems, controls, people and continuity. Introducing proportionate minimum standards, linked to registration and evidenced through independent accreditation, will give trustees and regulators clearer visibility of capability and emerging systemic risk, including the risk of disorderly provider failure.”
PASA’s consultation response also supported proposals to require administrators to register with the Pensions Regulator, with “robust continuity protections” in place to protect members if an administrator exits the market.
“As consolidation gathers pace and defined contribution megafunds emerge, scale alone will not guarantee better member experience,” said Fairs.
“Stronger oversight, tiered expectations, credible continuity planning, and structured exit frameworks will be essential to protect members and maintain confidence in the trust-based system.”
Pensions industry wants formal processes for professional trustee appointments
Responses to the DWP’s consultation on the future of trusteeship have focused on ensuring there are safeguards in place when decisions are made to bring in professional trustees as regulators seek to address conflicts of interest. Read the full article.
Meanwhile, the Pensions Management Institute – which also offers accreditation and qualification services for administrators – said a clear set of standards would allow the Pensions Regulator to “intervene proportionately” where necessary, as well as reducing ambiguity around expectations and giving “certainty about what ‘good’ looks like”.
It also urged the DWP to avoid “unnecessary duplication” of existing rules, such as those governing firms regulated by the Financial Conduct Authority. New requirements should be “implemented with careful phasing to avoid destabilising a market already under pressure”.
