In our first edition of getting to grips with governance, we provided our insight into scheme governance issues which Trustees should consider, covering Trustee effectiveness to ensure that the scheme objectives continue to be met. In the third part of our series, we are looking at the ongoing administration of schemes.
It was widely recognised in the industry that the majority of administrators reacted swiftly to the lockdown. This helped to ensure that usual business activity remained unaffected through careful planning and prioritising of activities, between the critical and non-critical parts of their service to schemes. Administrators should be congratulated on this. This shows that they have the ability to adapt and that there is the technology in place to enable this to happen.
Although this is good news, it is important that Trustees consider some of the following points.
Now that it has been over three months since lockdown, Trustees would have or, are about to receive the first administration report covering services to the scheme over the lockdown period. This will make interesting reading as this will hopefully provide Trustees the assurance that service levels haven’t changed.
It would be understandable that service levels may have dropped over this period, due to the initial challenges faced when lockdown became a reality, but Trustees need to understand how these will be addressed going forward, and whether the administrators have the resources available to do this.
It is understandable that non-critical events were put on hold during the transition to the new working practices, but how many of those non-critical areas have now become critical? As part of the administration reports, there should be a list of non-critical areas that are currently in progress and also planned for the future. Trustees need to review these to ensure that any delays in completion of these areas do not adversely affect the administration of the scheme, and they obtain assurance that the administrators are able to resources these projects.
Although the country is moving towards coming out of lockdown, it is unclear what will happen with working practices over the medium and long term, especially as there is chance of a second wave of infections. Therefore some of the questions that Trustees should pose to their administrator are:
We believe that the continued success of your pension scheme in providing the best possible outcomes for members is dependent on ensuring that the administration of the scheme provides beneficiaries with the best possible service over the period that they are members of the scheme. Trustees need to understand how administrators are continuing to cope with the situation and what plans are in place to continue to provide the service to members that they deserve in the future.
Our next instalment of getting to grips with governance will be covering covenant and funding, but if you wish to discuss this further in the meantime then please contact us.
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