With Pension Awareness Week upon us, Nick Reeve looks at a crucial part of the pensions industry that is finally getting the positive attention it needs.
Next week is Pension Awareness Week, with the nationwide “Pay Your Pension Some Attention” campaign having already begun, fronted by TV star Ross Kemp and financial adviser Bola Sol.
There’s an overwhelming need for people to engage more with their retirement savings, but it simply isn’t enough to expect individuals to solve the undersaving crisis themselves. That’s why policies in the Pension Schemes Bill, such as default decumulation services and the Value for Money framework, are so important to get right.
It’s also vital that the industry gets administration right, too. Ever since I started working a summer job as a pensions administrator 20 years ago, I’ve heard every joke about it being the most boring part of the retirement space.
As a proud pensions geek (with that summer job partly to blame), it has been exciting to see administration getting the positive attention it deserves. There are some really positive noises emanating from the Pensions Regulator’s review of the sector about it being taken more seriously by stakeholders and providers becoming more financially resilient.
That said, the age-old problems remain, such as outdated systems, poor data, and issues with attracting and retaining experienced staff. Newer problems are emerging, too, such as cybersecurity concerns.
The regulator made it clear this week that it expects trustees to shoulder more responsibility for raising standards in pensions administration, but it will have to do its fair share of work on oversight and guidance in order to support trustees in this regard. Organisations such as the Pensions Administration Standards Association and the Pensions Management Institute – now with a leading admin expert as its president – will also be key.
I’ve often said that it doesn’t matter how sophisticated or successful your investment strategy is – the whole thing falls down if you can’t get the right payments to the right people at the right time. Administrators are crucial to the pensions system, and their oversight, governance, and success will be foundational to the future of the industry.
Nick Reeve is editor of Pensions Expert.
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