22 April 2020
Trustees should be able to have confidence in their administrator, especially during a crisis. They should expect the administrator to be calm, and to get the balance right between flexibility and being alert and robust. Whilst the safety and wellbeing of their staff will be a key focus, the needs of members should be at the forefront of the administrator’s mind.
Members who are approaching their retirement date, pensioners who rely on their pension as their main source of income, and dependants following the loss of a loved one – to name only a few – will all have questions relating to the current situation.
The situation is both logistically demanding and very fast moving.
So what should trustees expect from their administrator during the crisis?
Be calm when communicating
We seem constantly to be surrounded by emotive language and serious words. There is no need for administrators to repeat them in communications: we all know it is an ‘unprecedented’ and ‘serious’ situation. Pension scheme members are likely to want to know that trustees are dealing with the challenges methodically and calmly and that things are in hand. So, the administrator should use language that is reassuring and authoritative. For example, when communicating with pensioners, start by telling them what’s important to them – “Your pension will continue to be paid in the normal way and at the usual time”.
Point members to reputable sources of information if they want to know more about how the current situation is affecting pensions generally - the Pensions Advisory Service has a particularly useful webpage. Ask them to call if they have any questions relating to their own benefits.
I would strongly recommend that administrators publish a note for members, providing answers to the questions they have been asking (or, even better, try to anticipate what they will ask). Given how fast things are moving, this should be kept under constant review, at least in the short term.
Given the restrictions on social interaction and movements, administrators should be open to different methods of sending and receiving information rather than relying on hard copy by post and “wet” signatures. The option to be able to make use of different forms of electronic communications – such as email and online portals - will be very helpful.
Be pragmatic and, where necessary, prioritise
Administrators should have a clear list of priorities – starting with paying benefits on time. PASA has issued helpful guidance which sets out what administrators should be prioritising and articulates what best practice looks like.
If an administrator has a robust Business Continuity Plan then remote working practices should mean that most tasks can continue to be processed, albeit some may take a little longer. Whilst members are likely to be understanding, they will still be hoping to a large extent that it will be business as usual.
However, there may be some non-critical tasks that administrators ask the trustees to delay. Some examples might include project work such as GMP equalisation exercises and any improvements to service. Whilst this may be sensible it does need to be thought through carefully. It is important that trustees do not miss out on de-risking market opportunities should they arise.
Be alive to evolving issues
The situation is evolving quickly, and it is important that administrators remain nimble and alive to the issues surrounding pension schemes – both those that may impact their immediate work and those that may impact them in the future. The Pensions Regulator is naturally at the forefront of this and has published useful guidance on how the situation might impact members.
Scamming is an area of particular concern, and members, trustees and administrators are being asked to be extra vigilant. Sadly, scammers are already taking advantage of the crisis to target pension scheme members using increasingly sophisticated tactics, and cyber crime is expected to rise. Administrators should always point members to Scamsmart.
In short, it is important that administrators keep calm and carry on. These are challenging times for us all, but continuing to pay the right benefits and on time should remain a comforting constant.
These are the actions I would expect of an administrator if I were a trustee. It is, of course, important that trustees continue to monitor their administrator – perhaps even more important now. As the situation evolves, trustees will need to strike the right balance between asking for information to help with this monitoring and avoiding using up valuable resource that could otherwise be used helping their members. They may find our Covid-19 insight hub helpful.