Posts Tagged ‘Pensions Administration’

James Geen

Brexit. The fog of uncertainty. Political claims and counterclaims. Arguments between those with rose tinted glasses (both on the remain and leave sides of the argument) on what the Brexit outcome might be. Cutting through this there is a fundamental question. What, at the end of the day, does a pensioner living abroad have pretty high on his or her wish list? I might put a small wager that continuing to get their pension paid is not a bad guess at the answer.

So, what are the issues around pension payments?

Government alerts have flagged possible difficulties in making payments to EU based pensioners on Brexit, following the loss of access to the EU ‘passporting regime’.

As far as trustees are concerned, loss of access to the regime means that they face uncertainties over how payments will be made, potential delays in payments and increased costs of such payments. These issues need to be thought about by Trustees when considering the risks to the scheme and have been highlighted in the Government’s economic analysis.

If the payroll costs of paying EU based pensioners increases, then trustees will also need to consider who will meet the cost of these additional charges, the Scheme or the Member.

A further concern is an increase to the processing time and the potential issue of difficulties of EU based pensioners relying on a UK based bank account for accessing their funds.

So, with this in mind, what do trustees or administrators say to pensioners when they ask that very relevant question, will my pension payments be affected? To date, our experience is that Brexit has not created a rush of phone calls from pensioners living in the EU worried about their pension payments but, as we head towards 29 March 2019 and there is clarity over what might, or might not happen, being prepared for the question is important.

Perhaps saying nothing, or we don’t know, is the answer. However, given warnings from the Government on potential difficulties in making payments to EU member states, whether or not trustees decide it is appropriate to communicate with pensioners at this stage, they should at least consider the issue and have something in the back pocket. At least they will be prepared to explain why it is difficult to give a definitive answer. It may not be an answer that gives a lot of comfort, but it is an honest assessment of the situation.

A consideration, for trustees is whether there is sufficient information to add value to their pensioners by a wider communication now, or whether a communication should be delayed until they have more certainty on the issues. Whatever trustees decide, they should prepare a list of potentially affected members, so they are in a position to communicate quickly, if they decide to communicate with these members.

Brian Spence

Spence & Partners, the UK pensions actuaries and administration specialists, scooped their second award of the year last night at the European Pensions Awards 2015. The company was awarded the Pension Scheme Administrator of the Year title for their ‘Spence approach’* for defined benefit (DB) pension schemes at a prestigious ceremony at London’s Grosvenor House Hotel.

Spence were judged against their peers by a panel made up of professionals from across the European pensions sphere, including providers, pension funds, consultants and representatives from various European pensions and investment associations

Brian Spence, CEO of Spence and Partners, commented: “We recognised some time ago that pension schemes are no longer working to an indefinite time horizon and needed new and innovative solutions to help them, so we developed our services accordingly.  To say we are thrilled to receive this award, our first for administration, is an understatement. We are incredibly proud of the service and have worked hard to carve our niche in this market so to be recognised by such influential and expert industry colleagues from across Europe, against such stiff competition, is a fantastic acknowledgement of the hard work and dedication of our team in putting it together. Read more »

Brian Spence

Pension scheme trustees, even most professional trustees tend to concentrate on the “big” issues like investment, the actuarial funding position of the scheme and the employer convenant.  This is right and proper but the attention given to pensions administration may suffer as a consequence.  Relative to actuarial swings and roundabouts pensions administration costs are small.

Nevertheless the cost of administration and achieving compliance with more and more onerous regulations is an area where trustees do need to ensure that they are getting value for money.

We have had a lot of hits on our website for a simple pension administration cost calculator devised by Sean Browes which allows trustees or employers to benchmark pensions administration costs.

Brian Spence is a founder of actuaries Spence & Partners Limited and a director of independent trustee Dalriada Trustees Limited.  You can follow him at @briandspence or @PensionsEndgame on Twitter or link to him on LinkedIn.

Follow @SpencePartners and @DalriadaTrustee on Twitter.

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