Change of administrator leads to full governance review

A first-time outsourcing of pension administration led to one of our clients deciding to undertake a full scheme governance review.

Barnett Waddingham was appointed as Secretary to the Trustees and administration provider for a large hybrid scheme in 2017. This was a first-time outsourcing, with both services having been provided in-house since the Scheme’s inception.  

The challenge

Crucially, the Trustees wanted to ensure that the transition was handled in an orderly yet sensitive manner, especially given the impending departure of the incumbent team. Members of our pension administration team worked very closely with the in-house team over a six-month period to facilitate a timely and comprehensive handover.

The transition was challenging as it was a complex Scheme, and it was therefore critical to build a strong relationship with both the Trustees and the existing advisers from the outset.

Whilst the handover period was generous, the main focus of attention was on the administration and payroll transition, as this posed the most risk.

The solution

The Barnett Waddingham Scheme Secretary worked with the existing Pensions Manager to gain a good understanding of governance procedures and to receive relevant documentation.  

It soon became apparent that the role was more than that of a Scheme Secretary and involved many of the responsibilities of a Pensions Manager, including:

• budget management;
• coordinating investment activity; 
• documenting policies and procedures; and
• monitoring and managing advisers.  

The Barnett Waddingham consultant adapted to the additional challenge and worked hard to rebuild a structured and robust governance process whilst maintaining business as usual.

The appointment of a new Scheme Secretary provided the Trustees with a timely opportunity to take a step back and review their core strategic objectives and associated governance tools and processes.

The results

Nine months later the following had been achieved:

• A more structured and organised meeting process, resulting in clear, unambiguous meeting papers which set out exactly what is required by the Trustees, facilitating a better decision-making process.
• A review of key governance documents such as: Action and Decision Logs, Conflicts of Interest Policy and supporting Registers, IDRP policy, Expenses and Invoice Approval policies and a new budget monitoring process.
• The appointment of a new DC adviser and reinstatement of the DC Sub-Committee with clear Terms of Reference.
• Review of the Investment Sub-Committee Terms of Reference to reflect new membership and responsibilities.
• Creation of an Administration Sub-Committee to deal with specific admin-related matters and Trustees’ discretions.
• An audit of archived Scheme-related documents held by the Employer and proposal for future storage.
• A benchmark fee review of the auditor where the fee charged was felt to be excessive, resulting in a 30% reduction.
• Excellent working relationships with the other Scheme advisers, working in partnership to support the Trustees in their objectives.
• Agreement to undertake a full governance review.

Full governance review

A full governance review followed the transition. The BW team made sure that relevant policies were in place, formal documents were up-to-date and workable, and there was a review framework for advisers and the Trustees themselves. The review resulted in eleven recommendations for the Trustees to consider. These included matters such as developing a more practical operational Risk Register, drafting terms of reference for key roles and sub-committees, developing a framework for reviewing advisers, documenting the process for the appointment and induction of new Trustees, and carrying out a Trustee Effectiveness review.

The result was that the Trustees felt confident that they were in a much better place from a governance perspective and had a suitable platform from which to continuously review and improve. The governance review and associated activity put them in a stronger place to deliver their strategic objectives and provide members with the security of a well-run scheme.