The Pensions Regulator (TPR) expects trustees to be interested and understand administration and how it is delivered. After all it is the shop window for the pension scheme and for many members, the only interaction they will ever have with their pension scheme. Whilst investment and funding issues are fundamental to providing the means to pay members’ benefits. It is the administrator who actually calculates and pays these. TPR expects trustees to take an active interest and responsibility over ensuring this is carried out accurately and in a timely manner.
Administration has often been called a hygiene factor for trustees. Today’s pension scheme trustees have many calls on their attention and often administration is only prioritised when something has already gone wrong. This can be avoided by proactive and ongoing engagement with the administrator.
Proactivity means – ‘taking action to control a situation rather than just responding to it after it has happened’. So, by taking this stance trustees remain in control and can avoid their attention being diverted to sorting out problems when they least expect it. For example, when they are trying to deliver a de-risking solution.
To engage with means – ‘to establish a meaningful contact or connection with’. So, by having meaningful discussions with their administrator, trustees can ensure their attention is focused on the right things at the right time.
Evidencing and ensuring appropriate levels of good governance exists in pensions administration is not new – regardless of how it is delivered. But, TPR now expects trustees to engage with administrators and be able to evidence this. PASA will launch its Trustee Administration Governance Checklist this month to support trustees in their evidencing.
It is derived from the governance principles that already exist within the
PASA standards. This effectively means administrators which have already achieved PASA Accreditation have already been assessed against the administration governance principles. The checklist has been prepared for trustees whose schemes are
not Accredited. It covers the same areas within the Standards of:
· Contractual agreement
· Reporting & management information
· Operational procedures
· Business continuity
· Change control
· Control assurance
· Data management
· Staffing
Ideally, trustees will be able to work through the checklist and be satisfied they have a positive response to all aspects. However, inevitably there may be areas which could need clarifying. In these cases, trustees can raise these issues with their administrator to work towards a positive solution. Perhaps it even raises awareness of previously unknown risk areas, or where areas of improvement are necessary.
These could potentially trigger a more in-depth review. Whilst it comprises a list, PASA does not intend for it to be used as a tick box exercise. In keeping with the principles of the Standards, the checklist allows trustees to note down what next steps they will take, or what information they need and of course, when they need it by.
Some administrators offer dedicated administration meetings, in addition to the normal trustee meetings. Whilst this tends to be offered to the larger schemes, it is worth trustees asking their administrator if this is something they are willing to provide. Having a dedicated meeting can ensure administration isn’t pushed to the bottom of the Agenda and issues tend to be highlighted more quickly and an action plan put in place. The PASA Administration Governance Checklist can form the basis for these meetings.
In its response to the 21st Century Trusteeship work, TPR stated it sees the value of administrators being more heavily involved with trustees to help them exercise this good governance. It also enables them to demonstrate it to TPR, but more importantly to members.
Kim Gubler, Deputy Chair, PASA.
