Counting the cost

Large-scale, complex IT systems and other processes are drawing the life and pensions industry towards outsourcing at a lower cost

Forget the ‘best price or no dice’ mentality

While the trend for sourcing the best pension administration provider has been to treat it like buying a new car, the reality is that shopping by price will likely get you a raw deal

No news is good news for scheme

After a less than satisfactory low cost pension administration service, a global client is keen to sing the praises of ‘high quality’ HS Admin

The taxing role of an administrator

The level of responsibility shouldered by scheme administrators is vast, and being aware of the liabilities involved is crucial to avoid potential lawsuits

Outsourcing the pensions manager

Choosing to outsource the top pensions role can work well under the right circumstances if the best fit manager is selected

Careful selection leads to success

Although on the surface it may seem a complex process to outsource a pensions manager role, this case study proves how simple it can be

It’s all hotting up

Consolidation is the name of the game as the numbers posted by the bigger players continue to force the rest onto the defensive while outsiders covet the prime profits on offer

Seven steps to heaven

Types of outsourcing deals have evolved over the years, as have outsourcing suppliers themselves. So here’s the Troika formula for excellence, reduced to seven steps

Facing up to the major challenges

Technology is a main factor in making any changes to a company’s operations. This is where business process outsourcing can step in and take the strain

Let’s start at the very beginning...

The future sustainability of BPO lies in outsourcers being useful partners to businesses from the early stages, such as R&D, testing and product launch

Perfect partners

Cutting costs used to be the main reason for choosing to outsource, but times have changed and companies are now looking at outside resources as problem-solving partners

Forget conventions

Creating a successful oursourcing service is down to responsiveness, innovation, and excelling in customer service. And doing it better than your competitor...

Outsourcing answers

With some high profile failures, as well as successes – it can truly be said that outsourcing has received mixed press over the last few years

Fail to plan, plan to fail

The methods and controls for managing risk can have a huge impact on the administration and success of pension schemes

A changing landscape

Migration from DB to DC schemes, cutting edge technology and increased regulation are transforming the world of pensions administration

Business process outsourcing: the shape of things to come?

Matthew Craig, head of editorial, online pensions projects, FT Business: Where is the UK life and pensions market at the moment? Are we now at a stage where outsourcing is part of everyone’s strategy, or are some companies still coming to terms with it?

Risk nothing and risk everything

Risk management is becoming an important tool, which every manager should have under their belt, as regulation continues to encroach upon the industry, says Phil Boyle

Customer service vs cost savings

Pádraig Floyd takes us through the current issues in the UK outsourcing market, including the motivation behind a company’s decision about whether it should offload a key part of its business

Going the distance to reach a goal

An initiative as promising as RSPA should have no problem garnering support fom the pension industry, yet progress has been slow. Steve Connor looks at whether the campaign has been a success over the long term

Improving pension administration

The RSPA was formed in 2001 with the intention of raising standards of pensions administration. Retiring trustee and secretary David Herbert reports on the progress so far

Get connected for better admin

A relaunched website gives advice on pension administration topics such as simplification, reporting, and risk management. Sarah Lama describes the development process of www.raisingadminstandards.com

Outsourcing driven by change

We all like to think we are masters of our own destiny, regardless of the degree of control we wield over our lives. It is because of control that the administration function has often remained within the plan sponsor.

Ownership or dedicated expertise?

Outsourcing continues to be the way to go because companies can save money and concentrate on their main business – and Ceri Jones discovers there are other advantages

Do you wanna be in my gang?

Passionate about delivering the highest service levels to the industry, the RSPA’s poor take-up in the industry should be ringing alarm bells, writes its chairman John Reeve

A changing environment

Trustees have to make sure they have the right monitoring procedures in place as new regulations require closer management of internal controls. Andrew Penketh reports

A testing time

Stuart Baker takes a scheme through a Pension Protection Fund assessment period

The question: rupee or not rupee?

Stuart Drew looks at the choice between India and China when it comes to offshore outsourcing

Make your mind up time

Uncertainty surrounds many of the key issues affecting scheme administration leading up to A-day, but decisions will soon have to be made by employees and trustees on the regulations which have already been announced. Colin Wheeler reports

Meeting members’ expectations

The Raising Standards of Pensions Administration initiative has become firmly established in the pensions industry and key to making a real and positive difference for the average member, says John Reeve

Chasing members’ expectations

The Raising Standards of Pensions Administration initiative has become firmly established in the pensions industry and key to making a real and positive difference for the average member, says John Reeve

Geof Pearson

1. Some people might think that a footballer being paid £100,000 per week should not make mistakes, but he does. Judges make mistakes, lawyers, journalists, doctors and so do pension administrators. My guess is that there are a lot less mistakes made in pensions than many other professions but, in my experience, when they do occur they arise from people not concentrating on the matter in hand or from being put under pressure. If pensions work and activity was distributed evenly day by day there would be less likelihood of mistakes, in my view, but life is not like that.
2. I have worked in pensions since 1965 and administrators have always done their best.
   I think the biggest improvement in performance comes when standards are measured and where additional resources (for example, more people/technology) are allocated to improve performance. I do not believe the Pensions Act 2004 will have as big an impact as the Pensions Act 1995 or contracting-out in 1978 did in improving administration standards. The new legislation will improve security for members but that is a different thing.
3. Technology is both a good thing and it is not. In the days before computers, when pensions and actuarial valuations were calculated manually, it was hard work, but everyone understood the underlying principles and processes.
   Now, the number-crunching is done by computer which saves a lot of graft but administrators do not always know the underlying principles so that we have problems when technology lets us down. Of course, I’d vote for new and better technology every time but lets not kid ourselves that it does not bring new problems to deal with.
4. Some initial fresh work for sure – but eventually we should all be able to settle down to the benefits of a new simplified regime. If I was not intending to retire first, I would be looking forward to it. Honest.

Eddie Thomas

1. Two main reasons are lack of resources and lack of interest by trustees. Administration has not been seen as a sexy part of pensions and so has attracted little interest in many schemes. In DB schemes especially, the problems caused by poor standards can remain buried for many years, and often only surface when a scheme is wound up.
2. As trustees get more involved and knowledgeable, standards ought to rise. There is still a danger though that other issues will be given higher priority. It is not clear what the driver will be to better administration especially as there will not be the same imperative to get scheme records right for schemes going into the Pension Protection Fund (PPF) as there has been for schemes in winding up.
3. By achieving greater consistency and enabling better communication with members.
4. Initially, the impact of A-day may be a deterioration in admin standards as schemes struggle to implement new processes. A-day will be an opportunity to review benefit structures and the system changes this may require will also put a strain on pension admin departments and systems. There is not a lot of tangible evidence that schemes will be ready in time, but eventually the simpler rules should help to improve administration standards.

Clive Witherington

1. If you have a skilled and experienced individual or group of individuals then generally administration can remain at a relatively high standard irrespective of the strength and effectiveness of the processes and technology supporting them.
   Where the skills and experience of the people are spread over a larger group then the importance of high levels of automation in processes and technology will become more critical. Poor administration can generally be traced back to the quality of the implementation process at outset; if corners were cut during implementation then it will have repercussions for the ongoing services.
2. There is no tangible reason why administration will be given a higher priority under the new pensions act although the way in which benefits are determined under the changed regime will mean communication (of new terms and requirements) will be a priority.
   Indirectly, it is possible that companies and trustees will use the pensions act to change the design of their arrangements and this may bring a fresh dynamic to the quality of administration services.
3. Technology can play a critical part in the improvement of administration services. As human beings we rarely exploit the full potential of the technology around us and yet it offers huge potential for increased (but sensible) levels of automation eliminating manual intervention which can be the point at which errors occur most frequently.
   The administration industry should spend more time investing in higher levels of automation – in calculations, processes, workflow which would improve speed, accuracy, consistency and overall efficiency.
4. Different suppliers (of systems and administration services) are in various states of readiness for A-day. Most suppliers will be ready for changes to underlying systems and processes to accommodate the core compliance changes. The two major unknowns revolve around the detail of the final regulations and the extent that companies and trustees will make late changes to scheme design ultimately affecting administration.
   If the regulations are published relatively late or companies disclose their required changes relatively late then for a period post A-day those delivering scheme administration may have to depend on (sub-optimal) manual intervention in the determination of benefits.

Michael Goy

1. We often like to say poor data and very often that is true (and not entirely in the administrator’s hands) but it can be more than this. It is frequently a lack of resources– it can be amazingly difficult to convince the employer or trustee how complex pension administration can be. But as pensions managers, maybe we also need to take responsibility for sometimes not investing as much time and money in the people we employ as we are prepared to do in the IT systems.
2. The act itself contains little about administration and an opportunity was missed there. Administration should be an item on every trustee board agenda to give them the opportunity to raise and discuss issues, even if they don’t always feel the need to take the opportunity. Hopefully, the regulator’s trustee knowledge and understanding (TKU) requirements may stimulate trustees to consider their scheme’s administration a little more.
3. Proper use of a good IT system can bring benefits of consistency and speed, perhaps even more important for defined contribution (DC) than defined benefit (DB) administration. It can also improve accuracy by using straight-through processing and avoiding the hand-offs and repeat input that otherwise occurs. Technology can be expensive as systems often come with functionality you may not need. Administrators should use systems that meet real, identifiable needs. For example, web technology may be essential for a scheme with well paid staff with high speed internet access, but for others, it may not add much at quite a high cost.
4. Temporarily it will have an adverse impact. Most administrators won’t have an A-day compliant system until close to A-day and so benefit estimates, for example, beyond A-day will be problematic. Defining the necessary changes will also be time-consuming. But when it’s finished it will hopefully provide a pensions environment which will be much easier for members to understand, which should in itself help us improve the standard of administration.

Scheme management in light of the new A-day pensions act
More . . . 

Building momentum, aiming high

The historical reasons for a lack of progress in raising standards in pensions admin can be consigned to the dustbin of history. While there is still work to do, it appears to be all hands to the pump, says Pádraig Floyd

More . . . 

---

The pension rights of civil partners

The civil partnership act will give legal rights to same sex couples. Helen Parrott (right) and Jane Wolstenholme explain the pensions implications

More . . . 

---

We need a massive dose of common sense

The focus of the pension bill seems to be wholly on knowing the documentation, agreements and the law. There is little or no focus on the practicalities of delivering a service to members, says John Reeve

More . . . 

---

Restoring the faith in admin

Pensions administration businesses will need to undergo huge changes in their corporate culture, switching from thinking in terms of transactions to concentrate on building and maintaining successful relationships and offering excellent service, says Paul Bingham

More . . . 

---

Caught in the regulatory net

The EU’s insurance mediation directive will bring the conduct of all non-life insurance business within the scope of regulation and affect the day-to-day activities carried on by administrators who deal with insurance products, says Clifford Sims

More . . . 

---

In total agreement

Service level agreements are an integral part of any pension administration outsourcing. Fergus Clarke looks at the application of SLAs and argues that although they are a useful benchmark against which to measure performance, they do not guarantee that the outsourcing will be successful

More . . . 

---

Communication key to better admin

Poor communication leads to administration headaches for everyone – members, dependants, administrator, employer/trustee, says Tim Roberts

More . . . 

---

The three levers of effective outsourcing

There are three key levers in effective global sourcing for pensions companies, and the way to make the most of outsourcing is to engage with suppliers that can provide all three simultaneously, says Daniel Praveen

More . . . 

---

A meeting of minds

Ian McQuade outlines the highlights from the first ever Raising Standards of Pensions Administration AGM and finds admin need to emerge from the shadows

More . . . 

---

Pension schemes vs teenage angst

In many cases the state of the data within a pensions administration system leaves a lot to be desired. Like the beer cans in my son’s room, some data fields are empty, some are half full and some are full of some very dubious contents, says John Reeve

More . . . 

---

Guidance makes progress

As the first anniversary of the launch of the first guidance notes approaches, the chairmen of each of the three working groups of Raising Standards of Pensions Administration (RSPA) provide an update

More . . . 

---

News from other FT Business publications

DPN: Deutsche Pensions & Investment Nachrichten • Quant in Sicht • Auf Feindts Terrain • Brief aus Berlin • Jochen Treuz: Schafft das BilMoG wirklich Wahrheit?

European Pensions & Investment News • Sampension holds off on pricey commodities • Investors short-tempered as sun sets on affordable oil • New blood keeps wind in AP1’s sails • Denmark • Promoting pride of ownership

Nordic Region Pensions & Investments News • Avoiding the commodities crash fallout • Danish funds pressured into slashing costs • Danish fund uses chameleonic strategy to beat credit crisis • New blood keeps wind in AP1’s sails

Nederlands Pensioen- & Beleggingsnieuws • Joanne Kellermann:“DNB legt dit jaar nadruk op deskundigheid pensioenbesturen.” • De fiduciair manager aan het werk • Communicatie naar deelnemers krijgt meer aandacht • IFRS-regels bedreiging voor Nederlands pensioenstelsel • Pensioenfonds voor voetbaltrainers scoort nog steeds

Professional Wealth Management • Fevered fund houses seek Teutonic cure • Santander am waits for new golden years • Selecting the right product • Funds that really do what It says on the tin • Balancing profit with religion