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Don’t miss an opportunity - what should a good transition look like?

June 2023

More often than not, I’ve found these to be the top two reasons why a Scheme may look to move their administration provider:

1. DB Scheme pension buy-ins and buy-outs are on the rise while trustees and businesses look to decrease risk. There is now a tangible reason for sorting out administration. There’s an acknowledged realisation that good administration and data can be the difference between achieving buy-in/buy-out and securing member outcome, or not.

2. Good old ‘poor service’.

As we know, a transition can only start once the trustees and ceding scheme provider have agreed Exit fees (another topic that warrants much discussion).

I would encourage (nay, plead) adherence to the Pensions Administration Standards Association (PASA) Code of Conduct on Administration Provider Transfers to ensure the experience is smooth sailing.

However, from experience this is not always the case.


So what should a good transition look like for trustees and members?

Yes, let’s not forget the members. It can be a worrying for them to simply be told that the people looking after their pension are no longer doing so and there is a shiny new provider in place.

Lesson 1: Think about the members

Whilst, clearly, there are standard items that must go in the communication we would urge schemes to try and go a little further than just the change itself. Take the opportunity to include new contact details and the change of tax office and reference for pensioners.

Keep it simple. Why trustees are changing provider is rarely necessary – all they really care about is that they will be taken care of. Write about the positives of the new provider and what it means for them.

Lesson 2: The plan is the plan and stick to the plan

  • First step, create the Plan; including scope, roles and responsibilities, and key milestones.
  • Assign an implementation manager to oversee the transition process of the scheme.
  • At the outset, arrange an initial meeting with the ceding provider. The meeting will establish familiarity and serve to identify key deadlines, workflows, priorities and any relevant scope and limitations.

Your plan will look great on paper. However, the reality is that deadlines are often missed or incomplete data and information is received or even… not received.

So, stick to the Plan. Don’t be afraid to escalate with the trustees or with the ceding Provider’s higher management.

Don’t forget that the trustees still have some leverage with the ceding Provider, such as the payment of the exit fees.

Lesson 3: More than simply moving member data from A to B

Choosing a new provider is a prime opportunity to push for more than the bare bones of moving data.

Trustees should take the opportunity to ask for a full data validation exercise, involving the following steps to ensure that data and benefits are correct, complete and accurate.

1. Your new provider should carry out a full review of the Scheme documentation. Use the documentation review to provide a comprehensive administration guide to capture knowledge and support the ongoing Administration Team. With this, any areas of uncertainty on the benefit structure can be identified and confirmed with the trustee or legal advisors.

2. Carry out a comprehensive range of test calculations and spot checks. This will ensure members’ benefits have been calculated in accordance with the rules of the Scheme. And if not, you’ll have a plan to rectify.

3. Data validation covers all common and conditional data as a minimum. On completion of the data validation process, a comprehensive data gap analysis with recommendations for remedial work should be provided to trustees with recommended rectification actions.

If a transition is undertaken, using these three simple lessons, the new provider will be in best position to ensure the quality of their administration going forward. No provider wants to start off with incomplete data and incorrect benefits.

I am not going to go into the murky world of Implementation Fees. Trustees are often caught between the cost and the quality of service.

Although, in some circumstances, you pay for what you get.

I would say, don’t miss an opportunity to resolve any issues found as a result of a good and thorough transition. Poor administration will come back to haunt you and rectification costs are simply delayed.

Julie Yates, Director of Pensions Administration at Cartwright


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