Buyers Guide to Pensions administration

David Woods examines the options that employers have around pensions administration and the duties that should be covered

Pensions administration is the business of managing the everyday workings of pensions schemes.

It is the job of a pensions administrator to protect employees’ records, make sure contributions are received on time and invested properly, and ensure members’ details are correct and kept up to date.

This process can become complicated in light of the number of pension schemes and funds that an employer may operate. Some organisations, for example, may offer a defined benefit (DB) scheme as well as a defined contribution (DC) plan with a large number of funds that employees can pay into.

Administering DC schemes can be straightforward and an administrator will usually have the task of ensuring contributions are collected and invested. With DB schemes, however, administration can be a more complex process as schemes are often closed to new members or to future accrual.

Employers must choose whether to carry out pensions administration in-house or to outsource it to a specialist provider. Alternatively, some pension scheme providers may administer a plan as part of their package.

Tim Banks, head of employee benefits at Equiniti, explains that outsourcing pensions administration can reduce employers’ liability and workload. “Outsourcing administration will transfer the legal implications and risks away from the employer on to a provider. It will also allow an employer to buy into a bigger pool of expertise,” he says.

The cost of outsourcing pensions administration will vary depending on the type of scheme, the length of the contract with the provider and how complex a scheme is to administer. On average, however, administration costs between £25 and £35 per year per member.

Pension administrators are also obliged to take on a number of tasks for trustees and members. David Barham, head of DB administration at provider Hazell Carr, explains administrators are obliged to ensure trustees have sufficient knowledge and understanding of pension investments, for example. In addition, they must identify potential risks to members and mitigate these, for example, by using robust mechanisms such as IT systems which have smaller margins for human error. Administrators are also legally obliged to ensure contributions are paid on time and that communication with staff is delivered within disclosure arrangements.

“The Pensions Regulator requires pensions administrators to demonstrate there are schemes in place to monitor the administration and management of pension assets,” adds Barham.

Pensions administrators can also provide further support to trustees by playing a proactive role to ensure they do not fall foul of legislation, and are fully aware of their legal obligations to members.

“Twenty years ago, pensions administration was a lot less regulatory and depended on micro-management. Nowadays, administrators need IT platforms to make sure they comply with regulation,” explains Banks.

Product file: pensions administration

What is pensions administration?†

Pensions administration is the day-to-day management of schemes. It ensures members’ details are correct, and contributions are collected and invested appropriately. It should also have robust mechanisms to monitor schemes.

Where can employers get more information?†

For the legal implications of pensions administration visit:†

Some of the main providers are:†

• Aegon Trustee Solutions†

• Capita†

• Edis Partnerships†

• Equiniti†

• FPS Groups†

• Hazell Carr†

• Hymans Robertson†

• Northgate Information Solutions†

• ReSource Pension Services†


• Scottish Widows Actuarial and Administration Services†

• Watson Wyatt