Like in the fairy tale, the industry needs its “Cinderella”- without each administrator’s efforts, the system would collapse. But just as in the fairy tale, administration is taken for granted. But is there a Prince Charming who could turn things around? Could be.

I’ve been pleased to see progress with some schemes inviting the administrator around the table to discuss projects and service delivery and sometimes even before decisions are made. This is as it should be. Administrators are part of the overall pensions management team and crucial to it.

Imagine my concern to recently hear a number of complaints from administrators suggesting that things might be going backwards. Some trustees are asking administrators to indemnify them for following TPR guidance on scams and also insisting that costs for additional due diligence are borne by the administrator.  We must nip this in the bud.

We demand a lot of administrators. They work incredibly hard, keeping the wheels on even during COVID, but expectations are increasing all the time. It is important that the service evolves and fits with the times, but enhancing a service comes at a cost.

I have spent the last few years battling to improve standards of customer service, especially around protection from scams and on faster, better transfers. I have therefore added to the burden by asking administrators to do more to help members. Government and regulators have also added to the administration burden by a flood of consultation and demands on reporting, data and member communications. Threats of fines for failures in dashboard readiness make me question how much we’re really all in this together.

Midnight is approaching:  we won’t turn into a pumpkin, but we do face a confluence of scarce resources (we’ve managed to talk DB admin down, so that people see it is a limiting career choice), data analysis and cleansing to dashboard-ready standard, preparing for data sharing with dashboards, GMP equalisation, expanding scheme reporting requirements, technology developments and enabling better retirement and transfer choices. Phew!

All of this requires investment in people, processes and systems. Investment to improve things for the future. But a third party administrator can only invest if it makes enough profit to do so and an in-house team can only invest if the sponsor is willing to pay.   Outsourced administration fees have taken a hammering over the years, as schemes have sought to demonstrate value for money, often through economising on administration costs and administrators have played along.

A number of years ago, I came up with a great idea for a client who wanted major changes to systems and processes. I proposed that the client share in the investment up front, to achieve guaranteed savings and better service in the years ahead – and guess what; they said “no thanks, it’s your job to be better than you are, so we’ll move to another company willing to make the changes for free”-  and they did.

Government, regulators and all of us want administrators to be efficient, high quality and low cost. We also want schemes to ensure they are receiving value for money for services they buy. Government also wants schemes to invest in UK plc infrastructure and ensure the success of the dashboard. We all want member benefits to be safe. On the surface, this is well and good, but how is this all paid for?

Administration needs investment. Schemes have had the advantage of relatively low admin costs for years, but this has come at the cost of investment in service enhancements and transforming administration for the 21^st Century. 2024 is crucial in delivering dashboards, which themselves will create a tsunami of member engagement. 

I believe that scheme trustees ought to think towards the future running of their scheme and incorporate an operational strategy as part of their funding plan. This means going beyond setting the budget in line with an aged contract, but working with the administrator to ensure that they are adequately supported to do what schemes need them to do. We really are all in this together.

The capability gap between now and 2024 is significant, so I think it is time for some government support for this important industry, rather than fines for failure. I propose that instead of asking what the pensions industry can do for government, government should ask what it can do for the industry. For example, government grant funding to allow schemes to get data up to scratch and to get ready for dashboard, would give dashboards a flying start and ensure their success. Great for UK plc.

So is there a Prince Charming who could come on his trust steed to rescue “Cinderella” admin for the good of the country? Guy Opperman, our skilled horseman and Minister for Pensions could be that hero.