Five things to consider when switching pensions administrators

Switching to a new administrator is often a daunting decision for trustees of pension schemes

While a switch offers the prospect of efficiency gains and improvements in service, it’s a move that involves a material amount of work, and potential short-term disruption in service. So getting it right is crucial – you want the engine of your scheme to keep running, and an administrator that makes the switch as seamless as possible.

So here are five things to think about when you are drawing up your shortlist of pensions administrators.

1. What are your medium and long-term plans?

Whether you plan to target buy-out or run the scheme on, you will need an administrator that can deliver in line with your objectives. If buy-out is your aim, does the new administrator have specialists within its own practice, and its wider firm, who can help you get to buy-out seamlessly? And if you’re planning on running the scheme on, the new administrator will need to continue to invest in technology and people to deliver a high quality service well into the future.  

2. How well will your data be interrogated?

As part of the implementation process, will the new administrator fully analyse the scheme’s data, test calculations and identify potential issues? Will they produce a report recommending how data can be improved, and have the specialist experience and resource to carry this out? This is an important opportunity that shouldn’t be missed when changing administrators – you want to start the new appointment feeling reassured that the data and benefit calculations are correct, and that the data and calculation processes haven’t just been ‘lifted and shifted’ to continue with all their existing inadequacies.

3. What efficiencies will the new administrator bring?

Will the new administrator make your and your membership’s lives easier? For example, do they have a trustee dashboard that will allow you to see management information in real time, rather than relying on out-of-date stewardship reports? Is there a dedicated client lead who is always available as your one point of contact for any queries? And will your members have access to online tools that will enable them to update their details themselves, view their correspondence online, and model their benefits? Technologies like these will not only provide you and your members with a great experience, but they can also reduce costs.

4. What will the member experience be like?

Making sure that members are only positively impacted by the switch is important. Once trust has been lost in the administration of a scheme, it is very hard to win it back. So make sure that the new administrator will put processes and communications in place to reassure members that the switch will be seamless; and, in particular, to reassure pensioners that they will be paid as usual. Your new administrator should have a brand that can be trusted.  

And of course, you’ll want to make sure your members are looked after in the future too – so what will the new administrator offer you that will enhance the experience of your members? Consider whether they have specialists in areas such as dealing with vulnerable members, divorce, pensions tax, and tracing. Ascertain whether they regularly seek feedback from members, and how they approach member communications.

5. How efficiently will they connect you to pensions dashboards?

The mechanics of calculating data for pensions dashboards and connecting to the ‘ecosystem’ is something almost all schemes will currently be working through with their administrator. But what will happen when you switch administrators after your scheme’s “connect by” date? You are not permitted to have a “blackout period” while you switch administrators – members will need to be able to access their dashboards information before, during and after the switch, so how will the new administrator make that happen? How will they deal with member queries once dashboards are made live to the public – do they have the capacity to cope with several spikes in volume?

It's a long list of questions, but to make sure that you choose an administrator that is right for you, it is crucial to explore each of these areas.

Moreover, you need a new administrator that will handle all these elements proactively, and make the transition a stress-free experience for you and your members. After all, if you’ve decided you want to make the change, you need an administrator that can both keep the engine of your scheme running during the switch, and make it work harder in the future.

Get in touch if you’d like to hear more about our PASA accredited Pensions Administration practice.