The second annual Pension Scheme Insight Report, from Capital Employee Benefits, has highlighted some of the challenges faced by pension managers and trustees.

Building on the results of the first report in 2015, the report reveals how schemes of all sizes are facing increased demands that are stretching the vast majority of pension managers and trustees in terms of cost and resourcing.

The report shows more than half (54 per cent) of managers and trustees cite GMP reconciliation as the major challenge for the next 12 months, making it the most commonly cited demand among pension managers and trustees.

Fifty-nine per cent said they were on target to complete GMP reconciliation, while 18 per cent stated they did not know what stage they were at, and 10 per cent said they were worried that they had either not started or not completed the process.

The report also revealed that the cost of running a pension scheme is coming under increased scrutiny.

Fifty-one per cent of respondents said that pension scheme administration has received board level attention, and a further 14 per cent believe this is imminent.

This year, 65 per cent of respondents said their scheme running costs were either receiving board level attention or that they thought this was inevitable; this is an increase on 2015, where 61 per cent of respondents confirmed this.

Improving member education and engagement among members was the second most commonly cited challenge for the coming year, named by 43 per cent of respondents.

Robin Hames, head of marketing and research at Capita Employee Benefits, said the task of running a pension scheme was not getting easier.

He said: "In last year's report there were five challenges that pension managers and trustees felt stood out; this year respondents highlighted at least eight serious challenges.

"It is clear that cost and resource, or more accurately managing cost and resource, remain very pertinent issues."

Other challenges highlighted in the report include a mismatch between the flexibility respondents thought their members would want when pension freedoms were first introduced and what they are offering now; the lack of tracing and mortality screening processes, and de-risking.

First published 28.4.2016

Lindsay.sharman@wilmingtonplc.com