Trustees urged to be 'proactive' on exit agreements

The Pensions and Administration Standards Association (Pasa) has encouraged trustees to “be pro-active” in new guidance on administration transfer exit, urging trustees to check if there is an exit agreement in place in their current contracts.

According to the guide, an exit agreement between the trustee and the ceding administrator should provide clarity on a number of areas, such as the scope of services covered, and on fees, including any additional out of scope charges and the charge rates applied.

The guidance also includes a template exit agreement that can be used as a schedule to an existing administration contract, a schedule within a new administration contract, or as a checklist for trustees and administrators to check their own exit agreement.

Pasa chair, Kim Gubler, said that the smooth transfer of administration will be a "key focus" for the group in coming years, pointing out that "concerns around the smooth transfer of administration services are increasing".

Gubler explained that these issues generally fall under the category of delays, unreasonable charges or out of scope services not made clear at the outset, and deterioration in the service provided during the notice period.

The guidance therefore aims to bring these issues to the forefront of the industry's minds, reviewing and reproducing Pasa’s previous Code of Conduct on Administration Provider Transfers, which sets out a framework to enhance the transfer of services between administrators.

Pasa Exit Agreements Working Group chair, Robert Wakefield, also stressed that a change of pensions administration provider should be managed in a "professional manner" to ensure the interests of the trustees and the scheme members remain "paramount", avoid unnecessary delays, and that service to pension savers is maintained.

“We’re encouraging trustees to be pro-active and check their current contract to determine if there are contractually agreed terms on exit (an exit agreement). Recent agreements are more likely to include a clause on exit, but it’s common for these to be missing from older contracts," he added.

“This document is designed to support trustees, administrators and scheme managers to plan and manage a transition, ensuring a smooth handover and to troubleshoot solutions where stumbling blocks are encountered.”

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