The Pension Regular has said that it is changing its regulatory approach to work more closely with administrators.
In a published note TPR explains why it is building relationships with pension administrators. It highlights that pension scheme trustees are the first line of defence for savers, which is why driving up standards of governance and administration in pension schemes is fundamental.
TPR says it is innovating by using its supervision approach to establish open, two-way relationships with a number of strategically important pension administrators to understand the challenges and tackle the risks.
TPR recognises that good quality data is the foundation of a well-managed pension scheme and is critical to improving the accuracy of annual benefit statements, valuations, and membership statistics, which is consistent with our trustee objectives. TPR says it’s committed to learning more about how trustees and administrators interact and what hurdles currently exist.
Furthermore, the Pensions Dashboards Programme has been a catalyst for increasing engagement between trustees and their administrators, who are critical to the program’s success.
These drivers of engagement have highlighted a need for TPR to enhance its regulatory approach to engage directly with administrators. TPR says it wants to learn more about what makes for excellent and bad administration so that it can respond to problems when they arise.
TPR has been proactively engaging with DB, DC and PSPS schemes since 2019, interacting with trustees, managers and sponsoring employers of pension schemes to identify best practices and threats to saver outcomes.
This included an Administrator Relationships function which is a team dedicated to engaging directly with third-party pension administrators to extend its reach and influence. TPR undertook a pilot with a voluntary administrator to explore potential risk areas and the level of burden this approach could have.
TPR states that it gained a more detailed insight into current market difficulties, allowing for greater visibility of administration risk and that it was able to incorporate pilot lessons into the ongoing design of the Administrator Relationships programme.
TPR is currently focusing on systems and processes, data quality, trustee focus, understanding and willingness to pay, member involvement and communication, and readiness for pension dashboards.
Broadstone head of pensions administration Gavin Giles says: “TPR’s note emphasises yet again how excellent administration can improve outcomes for members. Improving dialogue between administrators and trustees drives up standards of scheme governance which is crucial for acting as a first line of defence for members as well as enhancing data quality, engagement and dashboard readiness.
“We are glad that the regulator is banging the drum for administrators. Poor administration is a danger to member outcomes and the reputation of the industry so we must do all we can to ensure the highest standards are upheld across the industry.”
