Financial challenges pose the greatest risks to pension schemes, with investment strategy, scheme funding and non-compliance with legislation the top three worries for trustees, according to Capita Hartshead's 16th Annual Pensions Administration Survey.

On a positive note, the survey found that 97 per cent of pension schemes achieved or exceeded their administration service targets over the past year, an improvement from the 81 per cent recorded last year. The survey also showed that in-house administered schemes are now more likely to have written service standards than ten years ago.

Turnaround times, for example, have been specified in 90 per cent of in-house schemes compared to only 66 per cent ten years ago.

"The survey illustrates that, increasingly, trustees are requiring their in-house administration teams to deliver standards more like those of third-party administrators, reflecting the increased focus on governance and risk control," commented Debbie White, sales and marketing director at Capita Hartshead. "It will be interesting to see next year how the rest of the market is adapting to these trends."

In terms of the financial challenges faced by pension schemes, security and accuracy of data made an appearance on the survey, although trustees did not indicate that they believe there is a need for urgent action. Not even half of the schemes said they would undertake a formal exercise to improve data quality, although this has recently been recommended by the Pensions Regulator.

"It is understandable that, in the current economic environment, trustees should be concerned about financial threats to their schemes," continued White. "However, data quality should not and cannot be ignored. For example, any scheme looking to secure benefits via a buy-out or buy-in will need to demonstrate the integrity of their data or face a hefty premium. Data cleansing can seem a daunting and labour-intensive exercise, however help is available. With this in mind Capita Hartshead has developed an automated solution that makes the process as painless and cost-effective as possible."

The survey covers 288 schemes with a combined 6.3 million members, and assets in excess of £220bn.

- Pensions Age June 2009

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