Poor administration could cost schemes 2-4% of liabilities

Poor administration could cost schemes 2-4 per cent of their total liabilities when undertaking a bulk annuity transaction, according to Premier head of trustee secretarial services, Jay Solanki

Speaking at Pension Age's Project de-risk: The DB journey planning summit, in association with Just, Solanki highlighted that when working on a large transaction, 2-4 per cent can quickly represent a "significant amount of money".

He added that some insurers would estimate the potential losses associated with poor administration as "significantly more than this, by a long way".

Solanki urged trustees to prioritise their administration, explaining that “people get quite fixated on assets and funding levels, but it’s important to keep proper administration up on the agenda”.

He also asked trustees to re-frame how they view administration costs more broadly, arguing that data cleansing exercises should be viewed as an investment, with a clear cost benefit analysis.

Solanki continued: “We need to try and get away from the fact that administration is not a commodity. There’s some real value there, it’s worth spending the money.”

Solanki also acknowledged the role of affordability in the journey to the endgame, emphasising that “it’s worth putting it on an agenda as a spend early on” in order to ensure costs can be met.

At the PLSA Conference in October, Pensions Administration Standards Association (Pasa) president, Margaret Snowdon, called for a spend of around £25m over a four-year period in order to get data ‘up to scratch’.

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