Introduction
Describing it as a “pivotal moment” for the industry, where the role of administrators has “never been more important”, TPR today published revised guidance to help schemes ensure high-quality administration and to meet regulatory expectations.
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In this Alert
Key points
- The revised guidance follows TPR’s recent market oversight report and recognises that, having once been seen as a “back-office function”, administration is now a “critical driver of good outcomes” for members.
- In summary, TPR believes that “the role of administrators has never been more important” when set against the backdrop of “increasing regulatory change, rapid technological transformation, and rising member expectations”.
- Replacing the previous guidance on “Administration of a DC Pension Scheme”, the new guidance applies to all scheme types. It consolidates TPR’s expectations for trustees and managers on key areas including member communications, data management, disaster recovery and business continuity planning.
- The guidance sets out practical steps that trustees and managers can take to meet the expectations in the administration module of TPR’s general code, split across four sections.
General code administration module
Trustees and administrators are expected to refer to the guidance regularly as a “practical framework” to ensure they are embedding best practice. Using examples, the practical steps which trustees and managers can take to meet the general code’s administration module are divided into four core sections. These are:
- Trustees’ responsibilities in scheme administration – including managing service providers and maintaining IT systems
- Key administration activities – covering some common administration activities and scheme-specific activities such as member communications, processing payment of contributions, transfers, investing contributions (for DC schemes) and processing incentive queries (for DB schemes)
- Key administration considerations – including keeping records, managing data, data security, disaster recovery and business continuity planning
- Maintaining the quality of administration service – covering administration policies and contracts, and establishing a service management framework with appropriate performance measures.
What’s new?
New elements included in the guidance cover:
- the importance of having a written administration strategy, as well as having robust arrangements in place to enable the effective oversight of outsourced or in-house administration
- guidance on IT system governance, including in relation to system adequacy, change control processes, proper oversight and regular backups, and
- broadening performance measurement beyond time-based service level commitments to better reflect the quality and accuracy of the administration service.
Next steps
Today’s guidance is intended to describe what good administration looks like, giving trustees and managers the practical tools to help “build effective partnerships” with their administrators. With expectations and developments in the pensions world ever evolving, scheme administration provides the foundation for any well-run pension scheme. Trustees, managers and administrators should therefore take steps to familiarise themselves with the new guidance as soon as practicable.
