The BAE Systems Pension Scheme is changing third-party administrators, moving schemes to Mercer this year. What is driving pension funds to review their admin arrangements, and has this activity increased? 

 

The decision to leave Capita and Equiniti for Mercer followed a periodic review, the scheme said. BAE Systems has a number of legacy pension schemes which, over time, have transferred into the main BAE Systems Pension Scheme. Capita were the administrators for one of those schemes, while Equiniti were administering the others, according to a spokesperson for the BAESPS. 

 

“It’s good practice to review service providers periodically and, following a review and a rigorous selection process, the trustee boards of each of the BAE Systems schemes took the decision to appoint Mercer to provide administration services for all defined benefit members,” the spokesperson said. 

  

Members were notified of the change in March. Mercer will provide them with a digital platform where they can see information about their pension benefits, newsletters and options on retirement, as well as update their details. 

 

 

A number of schemes are currently considering their administration provider, says Ian McQuade, a director at governance consultancy Muse Advisory, noting that they tend to fall into a few categories. 

 

The pensions dashboards – though the connection deadline has been pushed back – are a major reason for administrator reviews. In-house administered schemes might undergo a review because they anticipate that the dashboards will require system developments and probably lead to extra work.  

 

“This is a final straw for many schemes, and [they] are now looking to outsource,” he says. 

  

Others are looking to the endgame. Schemes targeting self-sufficiency rather than buyout are getting into position for delivering quality over the coming years. 

 

“Ensuring that they have the right administrator for the long term, with a strong online offering, is really critical,” McQuade says. 

  

But there are also some schemes where poor service from administrating scheme members has led the trustees to move the administration. These will typically use the transition activity to accelerate work on data, automation and their online offering with a new firm, says McQuade, “rather than spending money with an administrator that they do not trust to deliver”. 

 

Perhaps surprisingly, many schemes still do not offer much by way of online access for defined benefit members, while others provide the full suite. Some will only have a static site with key documents, while others give DB members the ability to model their benefits, consider the impact if they change their retirement date, and in some cases even action their retirement, receive their pension commencement lump sum and put the pension into payment. 

  

There is now greater focus by trustees on the quality of support that members receive, McQuade says, not just through the online service but also in terms of how members are dealt with when they are going through key life events like retirement or bereavement. 

 

“If the service to members at the point when the pension scheme is meant to deliver on its promise is poor, it undermines all of the good work that the trustees and sponsor have put in up to that point and leaves the member or their family with a poor impression,” he notes. 

 

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