Key people like this can be a huge asset and they undeniably make running a pension scheme or a project significantly more efficient and effective. However, the more vital a key person is, and the more value they bring to your team, the bigger the risk if they aren't around. And let’s face it, life happens, and there can be all sorts of reasons why your key people might not be available from time to time.
Key person risk – the risk that arises when an organisation is heavily dependent on specific individuals whose absence or departure would cause significant disruption – is therefore a potentially very significant area of risk for most pension schemes. It’s also a risk that the Pensions Regulator (TPR) has drawn specific attention to, including in its
December 2025 administration guidance.
Trustees should therefore be asking themselves the following questions to help them to identify and manage key person risk:
Who are your "key people"?
Step one is to sit down and think about who your key people actually are, ie who makes up the engine house of your scheme? There might be more than you’d think.
This should involve looking at every aspect of the scheme’s function - the trustee board, pensions management / scheme secretary, employer liaison, administration and other advisers such as actuarial, investment, legal and covenant.
It’s also important to think about:
- why are they so key? Is it their role? Their history? Their knowledge, skills or experience? Or perhaps it's their connections and relationships? Maybe it’s their familiarity with one very specific aspect of the scheme? and
- what are they so key to? Is it the day-to-day running of the scheme? A specific project? A particular strategic discussion?
What would happen if they weren't available?
This might be hard, and somewhat unappealing to imagine, but you need to have a fairly frank "what if?" conversation so that you can get a proper assessment of your key person risk.
Sometimes it’s just that things would be a bit harder or a bit more expensive, or that they wouldn’t go as smoothly. Or it may be that you’d need to adjust your priorities and cut back on the “nice to haves”, or have others step up into a different role. But I’ve also seen projects significantly delayed (with potentially significant knock-on costs), and in some cases even grind completely to a halt, when key people are not available to do their bit.
This thinking should also take account of the interaction between key person risk and other key risks you have identified on your risk register. For example, if a risk such as a major data breach, cyber incident or systems failure materialised at a time when X, Y or Z wasn't around, how might that change the likely impact of the risk or your ability to respond to it?
Do you have adequate measures or back up plans to help mitigate the risks?
There are a range of steps schemes can take to help mitigate key person risk. What steps will have the most impact will obviously depend on what the key person does and what makes them so central.
When it comes to the administration function, TPR expects schemes to have measures in place which allow them to maintain continuity and consistency of service even when there is change or disruption in administration personnel. Its guidance highlights the importance of ensuring that there are clearly documented (and fully up to date) process manuals and succession plans to ensure that knowledge is not lost, and new people are well placed to deal with even complex issues. It also flags the need to review business continuity and disaster recovery plans to reflect changes in key staff.
Succession planning is also important outside the administration team – for example, it’s highlighted in the section of the General Code on
recruitment and appointment of trustees - but other steps could be helpful too. For example, capturing someone’s historical knowledge in a scheme history document, or asking them to write a detailed guide to their role and responsibilities so someone could step in if they needed to. If it’s that a key person knows where all the documents are, could you set up a central database and make it accessible to a wider group? Would it be helpful to simply copy someone else into emails on a particular topic? However, if you are designating someone as a key person’s backup, make sure they know that’s the plan.
Are you prioritising their time and giving them the right support?
Even if key people remain in their current role, we need to make sure we aren’t taking them for granted and we are using their time and skills where they add the most value. If a key person is most critical on a particular project or committee, can we make time to allow them to focus on that by shifting some of their other responsibilities to someone else?
Key people should also be given the right support to ensure their role is sustainable for the long term and they aren't being stretched too thin. Not taking the right care of key people could significantly increase the risk that they end up having to step away just when you need them most.
I can think of numerous key people across all the schemes and teams I work on, people who just make things easier, and I will certainly be keeping my fingers very firmly crossed that they remain in role, doing what they do best.
But crossing your fingers isn’t enough. Schemes can, and should, be taking key person risk seriously and putting the right measures in place to ensure that they are managing the risks as well as reaping the rewards.
We should also make sure key people know just how much their contribution is valued.
Naomi Brown, Senior Counsel – Sackers
