Trustees to shoulder more responsibility for admin improvements, TPR says

The regulator today (11 September) published a report on the administration sector following 12 months of work in collaboration with some of the largest providers.

In the report, TPR highlighted several areas for improvement, including problems in hiring and retaining administration staff, upgrading technology, and cybersecurity. It has urged trustees and administrators to work closely together to solve issues and “raise the profile of administration” as a vital part of the pensions system.

Many administrators were “becoming more strategic and resilient”, TPR said, but providers and trustees would need to step up their efforts in order to improve further.

“As the market evolves, trustees must take greater responsibility and accountability for ensuring those improvements happen.”

Julian Lyne, TPR

Julian Lyne, interim executive director of market oversight at TPR, said: “Investing in technology and new skills, improving data, pushing for better governance and transparency, and strengthening resilience to cyberattacks, should help reduce risks and improve outcomes for savers.

“We expect administrators and trustees to reflect on these findings and work together to identify ways to improve administrative practices to better serve savers. As the market evolves, trustees must take greater responsibility and accountability for ensuring those improvements happen.”

TPR’s report outlined that administration had suffered from underinvestment as it was historically perceived as a “low-margin and low-value function”. However, it said attitudes were changing – leading to improvements in the financial resilience of administration providers.

The report stated: “Administrators and trustees need to prioritise investment in technology, systems and data for the purposes of improving member experience, drive value through increased automation and digitisation, and strengthen operational resilience, which is critical for pensions dashboards.”

Technology and cybersecurity key as dashboards loom

While administrators are working to update and upgrade their systems, TPR warned that “outdated systems remain a significant challenge”. Shortfalls in this area could hinder automation and limit firms’ ability to grow, as well as increase the risk of errors.

The regulator stated in its report: “While administrators are investing in improvements, this is being balanced with limited budgets and competitive pricing. Updating systems is expensive, resource-intensive, and time-consuming. Continued technology investment and strategic planning are essential to overcome existing barriers to deliver more effective and efficient services.”

“Continued technology investment and strategic planning are essential to overcome existing barriers to deliver more effective and efficient services.”

The Pensions Regulator

Michelle Esterkin, head of administration consulting at Brightwell, said: “Strong administration is the backbone of the pension system, integral to effective scheme management and member satisfaction, but it has suffered from a lack of investment.

“With increasing regulatory demands, technological transformation, pensions dashboards and rising member expectations, administrators have never been more important.

“The message is clear: investing in modern technology is not a ‘nice to have’. It is an essential prerequisite for strong administration, good customer service and a great member experience. And that is something that trustees of all schemes should be striving for.”

Staffing, skills, and investment

The Pensions Management Institute (PMI) said it was “particularly encouraged” by the report’s acknowledgement of challenges around “recruitment, retention, and the need for continuous upskilling – issues that have long demanded sector-wide attention as administration evolves in complexity and scale”.

Helen Forrest Hall, the institute’s chief strategy officer, said: “Raising the profile and strategic importance of the administration profession is essential… As part of our commitment to raising standards, the PMI continues to evolve its education and training offering. We are focused on ensuring that administrators have access to high-quality, relevant learning pathways that reflect the changing landscape and support long-term professional growth.”

TPR’s report said administrators were facing difficulties in finding and retaining experienced staff, in particular those familiar with defined benefit pension schemes.

However, it acknowledged that several providers were investing in training programmes and automation to make better use of existing resources, as well as exploring flexible working arrangements to facilitate more people entering the administration sector.

“Building a resilient and capable workforce is essential to delivering high-quality administration and meeting the evolving needs of savers.”

The Pensions Regulator

“Regardless of the approach, building a resilient and capable workforce is essential to delivering high-quality administration and meeting the evolving needs of savers,” TPR said. “Administrators should also actively manage ‘key person risk’, where critical knowledge is held by one or two people, by embedding knowledge-sharing practices and succession planning.”

The PMI has established an Administration Industry Group with representatives from across the pensions industry to explore how to address “workforce sustainability, technological transformation, and data quality”.

TPR to develop ‘new administration strategy’

As part of its continuing work with administration providers, TPR said it was developing a “new administration strategy” and would soon issue updated guidance “setting clearer expectations for trustees”.

Malcolm Reynolds, UK president at administration specialist Aptia, said the regulator’s approach was a “welcome” move, and urged trustees to treat administrators more as “strategic partners”.

“The member experience is high on the agenda of regulators and trustees, and pensions administrators play a crucial role as the contact point between members and their scheme,” Reynolds said. “Administrators are also at the centre of pension schemes’ strategic plans – from derisking to pensions dashboards and guaranteed minimum pension equalisation.”

The regulator also said it was “advising government on future legislation”. While it did not provide details, this could refer to work on a potential “Pension Reform Bill”, as mentioned in TPR’s latest annual report.

Pensions Expert  reported last month that the regulator had spoken to the Department for Work and Pensions about legislation that would give it additional powers in relation to trusteeship and governance, information gathering, and oversight of pension scheme administrators.