Pension administration costs under board scrutiny
Half of corporate boards have scrutinised the cost of running their pension schemes in the past year, according to new research by Capita Employee Benefits.
The survey of pension managers and trustees for Capita’s Pension Scheme Insight Report 2015* found that a further 11.1% believe that board level scrutiny of scheme costs is imminent.
Even respondents who believed their scheme was priced about right (53.5%) acknowledged that the cost had come under scrutiny at board level in the last year, or they expect it to in the near future.
Commenting on this, Stuart Heatley, Capita Employee Benefits sales and client development director, said: “Cost will always be an important factor in running a scheme and pension managers and trustees need to be mindful of this when deciding how their scheme is administered.
“Pension administration and the supporting software will have to operate within this environment of constant scrutiny and will need to identify the best means of delivering a quality solution at an acceptable price to both the provider and the client.”
The important role of supporting software was highlighted following the new pensions freedoms announced in the 2014 budget, which were largely effective from 6 April 2015. The changes include the introduction of Flexi Access Drawdown (FAD) - a new form of accessing a pension, with no cap on the amount that can be withdrawn each year and no minimum income requirement.
The majority of Capita’s clients with members with Defined Contribution benefits are waiting to see whether there is member demand for FAD. In preparation, Capita has built the capability to provide a FAD solution on both its HartLink and Profund platforms.
Stuart Heatley said: “Whilst both systems are fully flexible, we have designed a proposition that trustees can choose to adopt which we believe addresses the needs of members whilst managing the administrative complexity. This is another example of how we aim to offer our clients value-for-money software that meets the needs of both trustees and scheme members.”
*Pension Scheme Insight Report 2015: We’ve launched our first Pension Scheme Insight Report on pension scheme administration. The purpose of the research is to look at the current attitudes and practices of those with responsibility for trust-based pension scheme administration.
We surveyed 72 decision makers responsible for schemes with over £4.5billion in asset value and over 1.2 million members. By surveying Pension Managers and Trustees and examining the results we have brought to light what the collective voice is saying, highlight trends and develop solutions. To order a copy of our latest Pension Scheme Insight Report 2016, click here.
Our research reports are aimed at Pension Trustees and HR Directors, covering topics such as pensions, health, flexible benefits, engagement and wellness. They are free to download!Find out more