Community interest company the Pensions Administration Standards Association (PASA), has been running a set of administration standards for the pensions industry since 2012, setting the benchmark for pensions administration in the UK.
Our latest insight looks at the PASA, its guidelines on DC governance, and whether workplace pension providers use the guidance for auditing and benchmarking their own administration and governance processes.
PASA membership includes many aspects but is primarily about accreditation. In order to become accredited, providers must meet a set of standards which set the benchmark for what high-quality administration looks like.
The PASA also works to promote and improve the quality of pension administration services, with work including responding to government consultations, running industry working groups, developing codes of practice, and issuing industry guidance on GMP Reconciliation & Rectification, DC Governance, Data, DB Transfers, GMP Equalisation and Cyber Security.
The PASA is also to lead the development of conventions for matching pensions dashboard users to their pensions, helping to set the industry-wide conventions that can be adopted across the pensions universe to help match dashboard users to their pension records.
Since being founded the company has grown its membership considerably and is now considered the leading accreditor for pensions administration.
The Pensions Regulator and Department for Work and Pensions have recognised the demand for pensions administration services to be independently assessed and encourage trustees to select an administrator which has gained independent accreditation.
The PASA administration standards cover agreements, reporting, member and governing body feedback, error reporting, operational procedures, business continuity processes, change control, controls assurance, data standards, induction competency and staff development.
The standards apply to administrators of both DB and DC schemes.
The standards are overseen by the PASA’s Standards Committee which ensures the standards remain current, are formally review no less than biennially, and preparing examples of good practice for the use of members.
Our data shows that all workplace pension providers are aware of the PASA’s guidelines on DC governance. However, only four providers (six offerings) use the guidance when auditing and benchmarking their own administration and governance processes. These five providers are Cushon, Fidelity, Fidelity Master Trust, Mercer Master Trust Aviva, Mercer Master Trust Scottish Widows, and True Potential.
Other than Royal London and Hargreaves Lansdown, all other workplace pension providers asked hasve said they adhere to other industry standards of guidance to help them do this. Whereas Royal London said the firm is aligned with the PASA standard but use their own in-house processes.
Aegon Master Trust is externally audited against the AAF 02/07 standard which, whilst it is a controls focused report, does touch upon some of the areas covered by the PASA guidance.
Legal & General and Legal & General Master Trust are also audited against AAF standards. They are currently audited against AAF 01/06 but going forward will be audited against AAF 01/20.
Aegon Workplace ARC is a FCA regulated firm, and its processes take into account the FCA’s Treating Customers Fairly principles even where those principles don’t directly apply such as with trust based admin. The provider said it would “always look to be compliant with regulatory requirements, product rules, client requirements and the interests of our clients/members”.
Aviva Designer, Aviva My Money, Standard Life and Aviva My Money Master Trust also use FCA guidance when auditing and benchmarking their own administration and governance processes.
Standard Life DC Master Trust adheres to The Pension Regulator’s Code of Practice.
Scottish Widows, Scottish Widows GSIPP and Scottish Widows Master Trust adhere to the CCA Global Standards 7 when auditing and benchmarking their own administration and governance processes.
However, several of these providers are considering using the PASA guidance. Aegon Workplace ARC, Aegon Master Trust, Legal & General and Legal & General Master Trust all say they are considering using the PASA guidance for auditing and benchmarking their administration and governance processes in the future.
Overall, our data shows that whilst workplace pension providers are aware of the PASA guidelines on DC governance, only a few are actually using it in practice, with no single industry standards of guidance dominantly used.
