Reform and policies announced in last year's budget will present the greatest challenges to pension fund administrators, according to The Pensions Administration Standards Association (PASA).

The organisation highlighted the top three demands it expects of administrators of DB schemes to be faced with during the year ahead, including transfer quotations, current value of former deferred pensions, and making sure members take advice before transferring from DB to DC.

Geraldine Brassett of PASA, said: "Unsurprisingly, many of the challenges that administrators look set to face in the year ahead stem from the reforms and policies announced in last year's budget."

"That some of the important detail still remains unclear – even now – simply adds to the challenges that we are tackling.

The first of the three challenges highlighted by PASA is transfer quotations.

It says the expected demand on administrators to provide members with transfer quotations alongside retirement quotes, coupled with an increase in the number of transfer quotation requests will add cost to the running of schemes, and potentially add delays to information being provided by members.

The second is as members try to make decisions prior to retirement, they are likely to want to know the current value of former deferred pensions alongside details of their active pensions to get maximum benefit from guidance provided.

The third is that administrators may be expected to play a role in making sure members take advice before transferring from a DB to a DC pension.

"We're advising administrators to be aware of possible risks for themselves and their sponsors, such as whether an automatic offer of a transfer value at retirement could be construed as an inducement by the sponsoring employer, for a member to transfer out of the DB scheme in order to reduce liability," said Geraldine Brassett.

"Similarly, we're expecting administrators to play a pivotal role in the fight against a new type of pension scam where advisors are already stating that they are providing Government-backed material to members to help them decide to transfer to a DC arrangement."

Ms Bassett added that she had 'no doubt' administrators across the country will rise to the challenge, but encouraged them to seek guidance.

First published 29.01.2015

Lindsay.sharman@wilmington.co.uk