Aon Hewitt’s Pensions Administration Survey 2015 attracted 243 responses from across the pensions industry, with the majority coming from those in corporate pension and pension trustee roles and from across a wide range of industry sectors. The survey found that while issues such as Guaranteed Minimum Pension (GMP) reconciliations in response to upcoming HMRC changes remain top of schemes’ agendas, their ability to respond is being hampered by poor data – which may ultimately increase the cost of delivery.
Stephen Ruse, UK Outsourcing Commercial Director at Aon Hewitt said:
“It seems that pensions administration has hit a brick wall on several issues. On one level, our survey respondents indicated that the quality of administration has remained constant, with a respectable 52% of respondents saying it has at least remained static - a figure which is consistent with our last two surveys.
”However, the themes we saw in last year’s survey around data quality also remain. 21% of respondents said that the quality of their data will hinder the delivery of GMP reconciliation projects, while 20% said that it will add to the cost.
Stephen Ruse continued:
“All the priority projects identified by respondents are expected to be negatively impacted by the quality of scheme data – which suggests a real disconnect between what schemes see as important and the means they are able to devote to them. The risk settlement market is expected to see an increase in activity next year but without good data schemes can’t swiftly execute de-risking strategies. Trustees have to act quickly when market conditions are favourable – they don’t want to have to delay in order to clean scheme data.
“If I was to make one recommendation for 2016 it would be that any scheme that hasn’t undertaken a data cleanse in the last 12 months should do so.”
Other key findings of the survey include:
• 53% of survey respondents still see their defined benefit (DB) arrangement as their primary pension scheme
• 42% believe pensions will form a less important part of benefits in the future
• 70% currently outsource their scheme administration
• 45% want to receive administration from a provider which can deliver a broader, integrated offering, potentially including consulting, actuarial and/or investment advice
• Cost was the biggest driver for those who have outsourced, while control is the largest incentive for retaining administration in-house
• 46% agree or strongly agree that there is a correlation between price and service quality in administration…
• …but 40% are not prepared to pay more for a higher-quality service
• 60% believe Pensions Freedoms will fundamentally change the decisions members need to make….…but 51% do not deliver segmented member communications and have no plans to do so
• 31% cannot say what proportion of members will be 55 next year.
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