Pension schemes need to be directing more resources and attention towards administration, particularly in light of challenges such as meeting the scale test, according to Taylor Brightwell-Smith, regulatory theme lead at The Pensions Regulator.
Brightwell-Smith made the remarks at the Pension Administration Standard Association’s annual conference, held under the theme of ‘All These Things That I’ve Done’.
The scale test is a key part of the now passed Pension Schemes Act, which requires defined contribution multi-employer schemes to have a main default arrangement with at least £25bn in assets under management by 2030.
“Simply having a process is no longer enough. What matters now is whether administration can absorb change to scale effectively and operate under pressure without exposing members to risk,” he says.
Brightwell-Smith also brought attention to a perceived “underinvestment” in administration by schemes.
He says: “Under investment in administration has been normalized. That shows up as fragmented systems, degraded data, manual work arounds and teams spread thin across multiple concurrent programs. We need to move away from models that reward low cost over long term resilience.
“That role will require a change on both sides of the relationship, trustees understanding the true cost of sustainable delivery and administrators continue to articulate value in terms of member outcomes supported by evidence and clear reporting.”
Also at the Pasa event was a discussion between Laura Clark, a senior manager at the Alzheimer’s Society, and Kat Jarvis, operations third party administrator manager at Rothesay, on improved members communications to those who may be dealing with some level of cognitive decline or diagnosed degenerative disease.
Jarvis says: “We knew dementia was something that impacted lots of our population as well, but we weren’t the experts in that area, and the solution for those people was much more complicated. So that was the point that we reached out to the Alzheimer’s Society.”
According to the Alzheimer’s Society, there are an estimated 982,000 people living with dementia in the UK as of May 2024, with this number projected to rise to 1.4m by 2040.
Speaking earlier in the day was former pensions secretary Guy Opperman, where he repeated his ongoing concerns with two regulatory bodies (the Financial Conduct Authority and The Pensions Regulator) overseeing aspects of the Pension Schemes Bill, and called for the FCA and TPR to be merged, going so far as to label the proposed Value for Money framework as “batshit” due to this issue.
Also today (29 April), Pasa appointed Duncan Watson as a non-executive director.
He brings over 30 years of experience across pensions and financial services, with experience spanning strategy, governance and operations in regulated environments, focusing on member outcomes and pension administration.
