The Pensions Administration Standards Association (PASA) has said that when it comes to handling administration, pension schemes should operate more like corporates.

The independent organisation said many pension schemes would not be experiencing the problems that they are currently facing, if they adopted the approach that businesses use to run their administration.

"A pension scheme is no different from a business. In many cases it is bigger in capital terms than its sponsoring company, therefore a pension scheme deserves to be managed more like a business than a sideline, with good governance and joined up strategy," said PASA chair Margret Snowdon.

She argued that pension schemes should treat the administrator as a strategic partner and as part of the management team, rather than keeping it at an arm's length.

"Some schemes do this and many think that they do, but how many trustee boards still have their administrator attend the whole of each and every trustee meeting, rather than just offer a bit part, usually at the end, once a year, to report on transactions and service standards? The vast majority," Snowdon said.

She added: "The link between good administration and good outcomes is strong- the better the administrator, the better the outcome. It does not matter how good your investment strategy is, if your operations strategy is poor or nonexistent, you do not get the right outcomes."

As well as attending every trustee meeting and having a good mechanism for customer feedback, Snowdon argued that a good administrator also should be able to manage change, and should always seek to make improvements. If not then the administrator should be replaced.

"It's time some pensions schemes took a more professional approach to their administration relationship - it wouldn't be long before they'd reap the benefits," Snowdon said.


First published 22.01.2013

monique_simpson@wilmington.co.uk