Industry commentators have welcomed the government’s plan to introduce mandatory standards for pension administration providers as part of governance reforms.
The Department for Work and Pensions (DWP) this week published the results of its consultation on trusteeship and administration standards, and pledged to introduce a mandatory minimum standards framework for administrators.
The department said it would work with the pensions sector to develop a framework focusing on data accuracy and “operational resilience”, alongside other considerations. This framework would build on existing models, including the voluntary regime established by the Pensions Administration Standards Association (PASA).
“Implementation will need careful planning, with realistic timescales and recognition of the capacity and skills needed to deliver change while maintaining day-to-day services to members.”
The Pensions Regulator (TPR) will be given new powers to supervise administrators, including operating a formal register of providers. Pensions Expert reported in August last year that the regulator was lobbying government for more powers to help it regulate administrators.
Many respondents to the government’s consultation had called for TPR to be given the power to deregister providers in “serious cases”.
Mandatory standards ‘long overdue’
David Fairs, chair of PASA, said: “Good administration is fundamental to members receiving the pension they’re entitled to, when they need it. Clear minimum standards can help strengthen the quality and resilience of the services they rely on.”
He added: “Proportionate oversight should help identify problems early and support trustees in holding providers to account. Implementation will need careful planning, with realistic timescales and recognition of the capacity and skills needed to deliver change while maintaining day-to-day services to members.”
In a statement, the Association of Member Nominated Trustees said minimum standards for administrators were “long overdue”, adding that “accurate data underpins everything trustees do”.
Morten Nilsson, chief executive officer at Brightwell, said good administration was “integral to trust in the pension system”. Brightwell administers several large schemes including the BT and Mineworkers’ pension schemes, as well as supporting insurers Rothesay and PIC.
“Greater regulatory oversight of administrators is long overdue, and we warmly welcome the measures announced today, which will help raise minimum standards and strengthen confidence across the market,” Nilsson said. “Over time this will help improve operational resilience and the ability to transfer administrators more easily.”
Maurice Titley, commercial director for data and dashboards at technology provider Lumera, agreed that the move was a “welcome and important step”.
“It is particularly encouraging to see the focus on accurate records, operational resilience and the ability to transfer administration services effectively,” Titley added. “These are exactly the areas that become increasingly critical as the pensions market consolidates and administration is concentrated among fewer providers.”
He argued that the minimum standards should help provide measurable expectations across data quality and other factors. “The objective should be to make consolidation safer and more efficient, rather than allowing poor legacy data and technology to become barriers to it,” Titley said.
