Pensions administration- why are we so accepting of poor service?
Currently, there is a lot of talk in the industry about the pressures facing the providers of pension administration services, whether in-house or from a third-party administrator (TPA). The “to-do” list is formidable:
- GMP equalisation projects
- Getting data ready for settlement
- General data cleanse projects
- Liability reduction exercises
- The introduction of the Pensions Dashboard
Not forgetting business as usual of course – there are still scheme members to serve!
Pressures on TPAs
On a webinar earlier this year, discussing issues to be addressed in 2024 by trustees and schemes generally, a section on pensions administration highlighted the pressures on TPAs to deliver a good service to members, while having to deliver on the issues listed above and all the demand on resources this required. The discussion highlighted that some TPAs were responding better than others to these pressures, while still maintaining high-quality business-as-usual services.
In some instances, however, business-as-usual was suffering to the point where it was becoming an issue. The presenter from a well-known TPA highlighted the need for trustees to engage with their TPAs at an early stage if there were service issues, in an attempt to resolve them as quickly as possible. A professional trustee on the webinar explained that they had experienced service issues for one of their clients and a discussion had taken place with the TPA. This resulted in a slight improvement in service for a short while, after which the service reverted to its previously poor level, at which point they effectively gave up. On questioning as to why they hadn’t reviewed the market, intending to replace the TPA, they said it was too difficult to switch administrators, the implementation would take too long and be too expensive. They agreed that they had effectively accepted an ongoing poor service with all the issues this would create.
Changing TPAs
While this approach is not uncommon, it is an attitude I find very difficult to accept. Administration is at the heart of running a pension scheme, delivering benefits to the members, data for actuarial valuations, producing scheme reports, the annual report and accounts, etc. While changing administrators is not as straightforward as moving some other services, it is not that difficult. Good TPAs have extensive experience of transitioning schemes (this should only take 3 months for smaller schemes, rising to 12 months for the larger ones), they have well-documented processes and project plans, they can provide good member communications and ensure that the scheme is well set up for the future.
Ensuring a high-quality TPA service
As trustees, we owe it to our members and scheme sponsors to ensure that our TPA delivers a high-quality service. In terms of measuring how good that service is, I believe we should not just be relying on the TPA's measurement against the traditional Service Level Indicators (SLAs). Additionally, we should expect them, as a minimum, to be accredited by PASA, and I would also recommend there should be some external measurement of their performance, through organisations such as the Institute of Customer Service, or Investors in Customers, both of whom survey customers and staff to provide really useful insights into service delivery. Ensuring your members are getting a good service, as well as the data and delivery being of a high standard, will deliver savings and benefits in the longer term, whether your aim is to buy out, run-on, or just reach full funding.
We often hear in the pensions industry that our use of technology and customer service falls short of other industries, so please, in this particular area, let’s not accept mediocre or poor service from any TPA. It isn’t easy changing administrators, but it certainly shouldn’t be in your “too difficult-to-do” box!
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This blog is general in nature, it does not provide a definitive analysis of the subject matter covered and may be subject to change. It is not specific to the circumstances of any particular employer or pension scheme. The information contained herein is general in nature, not to be construed as advice and should not be considered a substitute for specific advice in relation to individual circumstances. Where the subject of this blog refers to legal issues please note that Citrus Pensions is not legally qualified to give legal opinions therefore you may wish to obtain legal advice. Citrus Pensions accepts no liability for errors or omissions.