Guide to Good Pensions: Scheme Services edition

Welcome to the first fully digital edition of the Guides to Good Pensions, the buyers guide helping you to spot the best performers in the pensions and investment industries.

The guides accompany the Pension and Investment Provider Awards, now assessing the performance, service quality, and innovation of the market for the 22nd, and arguably most important, year.

2020 was a year in which trustees and pensions managers who have appointed capable advisers will have been glad to have them by their side. And indeed, any who have been let down by their scheme service providers will have felt it most sorely.

Thankfully, the overwhelming evidence is that scheme services stood up to the test of the Covid-19 pandemic.

If one takes results as the only marker of success, 2020 looked to have been a successful damage limitation exercise. The majority of defined benefit schemes sponsored by FTSE 350 companies are back on track to meet their funding goals, according to analysis by Barnett Waddingham.

Likewise, a recent report found that defined contribution rebounded similarly, with even the most equity-exposed default funds staying the course and enjoying strong performance as the market panic eased. More challenging to resolve will be the stagnation in auto-enrolment participation that accompanied the lockdowns.

Critics might argue that these performances were driven as much by market dynamics, or even asset manager performance (to be covered in September’s issue of the guides) as any value-add from advisers and other service providers.

But the vast majority of submissions we received for the PIPAs this year demonstrated an extraordinary commitment by the industry to help schemes be there for members, even where this just meant making clients comfortable with staying the course in bumpy markets.

Our exacting judging panel had set specific entry criteria for each of the awards and put a premium on quality of service, often asking entrants to show how they had helped clients to navigate the early stages of the crisis, or how they had tackled a specific challenge thrown up by the pandemic, for example. The attention to detail and commitment to making these awards a robust process shown by our judges is legendary, and for good reason.

The judges were heartened to read examples of professional trustees freezing fees to distressed clients while helping advance the net-zero agenda, and administrators even improving turnaround times. We also rewarded companies that showed strong evidence of helping their own staff to endure tough months locked inside.

All of the category roundups you will find below feature our analysis of the forces shaping each sector, a summary of the judges’ thoughts on the quality of the sector and entrants to the awards, and of course our winners and commended entries. Many also include profiles of the winning entrants, along with Q&As sharing insight from key spokespeople.

We have included the bespoke entry requirements for each category at the bottom of this article.

Further insight into the judging process can be gleaned by attending our awards ceremony with a difference, scheduled for October 14. A panel of judges will dive into what makes a successful entry, while the broader theme for the event is ‘resetting the pensions agenda’.

Our speakers include familiar faces such as Lord David Willetts, influential voices from abroad such as the divestment activist Bill McKibben, and FT analysis from leading journalists Chris Giles and Josephine Cumbo.

You can read more about our process and judging criteria below, or click on a category to dive into our analysis of individual sectors. Look out for the second edition of these guides, covering investment services, coming out in September.

Welcome to the first fully digital edition of the Guides to Good Pensions, the buyers guide helping you to spot the best performers in the pensions and investment industries.

The guides accompany the Pension and Investment Provider Awards, now assessing the performance, service quality, and innovation of the market for the 22nd, and arguably most important, year.

2020 was a year in which trustees and pensions managers who have appointed capable advisers will have been glad to have them by their side. And indeed, any who have been let down by their scheme service providers will have felt it most sorely.

Thankfully, the overwhelming evidence is that scheme services stood up to the test of the Covid-19 pandemic.

If one takes results as the only marker of success, 2020 looked to have been a successful damage limitation exercise. The majority of defined benefit schemes sponsored by FTSE 350 companies are back on track to meet their funding goals, according to analysis by Barnett Waddingham.

Likewise, a recent report found that defined contribution rebounded similarly, with even the most equity-exposed default funds staying the course and enjoying strong performance as the market panic eased. More challenging to resolve will be the stagnation in auto-enrolment participation that accompanied the lockdowns.

Critics might argue that these performances were driven as much by market dynamics, or even asset manager performance (to be covered in September’s issue of the guides) as any value-add from advisers and other service providers.

But the vast majority of submissions we received for the PIPAs this year demonstrated an extraordinary commitment by the industry to help schemes be there for members, even where this just meant making clients comfortable with staying the course in bumpy markets.

Our exacting judging panel had set specific entry criteria for each of the awards and put a premium on quality of service, often asking entrants to show how they had helped clients to navigate the early stages of the crisis, or how they had tackled a specific challenge thrown up by the pandemic, for example. The attention to detail and commitment to making these awards a robust process shown by our judges is legendary, and for good reason.

The judges were heartened to read examples of professional trustees freezing fees to distressed clients while helping advance the net-zero agenda, and administrators even improving turnaround times. We also rewarded companies that showed strong evidence of helping their own staff to endure tough months locked inside.

All of the category roundups you will find below feature our analysis of the forces shaping each sector, a summary of the judges’ thoughts on the quality of the sector and entrants to the awards, and of course our winners and commended entries. Many also include profiles of the winning entrants, along with Q&As sharing insight from key spokespeople.

We have included the bespoke entry requirements for each category at the bottom of this article.

Further insight into the judging process can be gleaned by attending our awards ceremony with a difference, scheduled for October 14. A panel of judges will dive into what makes a successful entry, while the broader theme for the event is ‘resetting the pensions agenda’.

Our speakers include familiar faces such as Lord David Willetts, influential voices from abroad such as the divestment activist Bill McKibben, and FT analysis from leading journalists Chris Giles and Josephine Cumbo.

You can read more about our process and judging criteria below, or click on a category to dive into our analysis of individual sectors. Look out for the second edition of these guides, covering investment services, coming out in September.

PIPA scheme services categories – entry requirements

Actuarial Consultant of the Year

A section on performance should report client wins and retention over the year, and state what proportion of clients that have come to triennial review in the past year have been kept. This section might also include case studies of work undertaken during the year, but should be careful to explain the specific role that the actuary played in delivering an outcome for the client.

A section on service should include an explanation of how the company gets to know its clients, ensures that trustees and employers are listened to during the advice process, and how advice is tailored to individual circumstances.

A section on innovation should include examples of how entrants improved the overall quality of their services during the year. In particular, judges are keen to see evidence of how the quality of integrated risk management has been improved for clients over the year, with reference to how their people and systems interact with those of other advisers working with a scheme.

Investment Consultant of the Year

A section on performance should make some attempt to show how the entrant has helped clients move closer to their strategic investment objectives — we accept that investment performance varies from scheme to scheme based on their individual circumstances, but still want to see evidence of the value added by investment consultancies. Entrants should show how their manager selection functions have added value over and above that delivered by asset allocation, and state how often they have to replace managers they have recommended.

A section on service should describe how the consultancy ensures that recommendations are bespoke for the individual needs of clients. We would like entrants to describe an example of when something went wrong with a client relationship, and how they resolved this issue.

A section on the pandemic and volatility should show how many interventions were needed in client strategies over the year, and point to where the most value was added to client portfolios in the past 12 months.

A section on ESG should explain how the company has helped clients stay ahead of requirements on environmental, social and governance risk mitigation. This section should show clearly how advice is tailored to individual clients rather than just providing boilerplate disclosures, and show how the company has helped engage clients to make meaningful change.

Derisking consultant (buyout, buy-in, longevity swaps) of the Year

A section on performance should include the number and total value of deals completed during 2020 that the compnay has been chosen to advise on. Additional performance figures are welcome, including the proportion of clients of integrated consultancies that have now done derisking transactions. Despite these requests, the judging panel will not penalise smaller or new companies, and would like to see any evidence of good outcomes obtained for clients of all kinds. Entries should include the proportion of business obtained after quoting, details of delays due to capacity crunches, and what steps have been taken to avoid this.

A section on service should show how the consultant works with employers, but also trustees, to secure a good outcome for members, and ensures this culture is replicated across the company. It should take care to describe how conflicts of interest are identified and managed.

A section on innovation should focus on any developments in the company’s service that have secured better outcomes than might otherwise be expected for the client, and may choose to include case studies on how the adviser dealt with unusual client scenarios. Entrants may choose to outline their policies on alternative derisking products to buy-ins and buyouts, whether and how they plan to help clients access these markets.

Independent Trustee Company of the Year

A section on performance should state the number of appointments won and the number of appointments lost in 2020. This should also indicate where appointments were lost because a scheme wound up. Staff recruitment may be included, but should not be used as a proxy for scheme appointments. Entrants may also choose to state their policies towards diversity and inclusion, but must state concrete results achieved in 2020.

A section on the pandemic should be included, explaining the specific actions taken by trustees in the company in response to the Covid-19 pandemic to support clients, and the specific actions taken to support trustee directors.

A section on service and innovation should explain how the independent trustee company has made a difference to its clients over the year. Case study examples should explain outcomes achieved, but should also detail the specific actions taken by the independent trustee to deliver them. Any innovation should be clearly linked to client needs.

Pensions Law Firm of the Year

A section on performance may include business performance statistics, but we also encourage entrants to provide examples of how they have a) helped a sponsoring employer; b) helped a trustee board; and c) helped a membership. Where an entrant does cites involvement with a noteworthy client, transaction, case or regulatory engagement, entrants must take care to describe the specific role they played, advice they gave and its part in driving the overall outcome.

What development, as an organisation, are you most proud of in 2020?

How does your company give back to the profession, the pensions industry, and wider society?

Third-Party Administrator of the Year

Service level agreement performance should be reported over 2020 and in three months following Covid-19 lockdown. Include a table if possible.

Contact centre performance should be reported over 2020 and in three months following Covid-19 lockdown.

Any additional comments on performance would be welcome, including figures on how complaints were dealt with during the year. Entrants should provide evidence for the quality of the work they do, not just its timeliness.

A section on service and innovation should show how entrants have developed their online offerings over the year, and make specific reference to the problems it has solved. The judging panel would also like to know what steps have been taken to support staff in their support of clients. Client testimonials are welcome, but entries should endeavour to show us how the company ensures that instances of good performance are repeatable and consistent across the client base.

Covenant Review Provider of the Year

A section on performance should address results achieved for clients during the year, evidencing how good results have been delivered for a range of clients, rather than simply citing involvement with high-profile schemes. Client win figures should also be accompanied by client retention/loss data, and may look to differentiate wins by acquisition method — eg. word of mouth, bundled service, open tender. Specific case studies are helpful, but should give clear details of the entrant’s role in achieving an outcome. Overviews should also address the split of work done between advising trustees and employers.

A section on service should focus on client care throughout the year, making specific reference to actions taken to help stakeholders stay up to date during the Covid-19 pandemic and resulting lockdowns. This section should detail how the entrant ensured a high standard across their client base.

A section on innovation may look at advancements in assessment techniques, client reporting, unusual work undertaken, or other advancements such as reducing the cost of advice for smaller clients or engaging with policy developments. Innovations must have taken place in 2020.

Multi-Employer DC Provider of the Year

Gross performance of default fund main growth phase to end 2020 should be reported as annualised 1-year, 3-year and 5-year (%).

Sharpe ratio of default fund main growth phase should be reported as annualised 1-year, 3-year and 5-year (%).

A summary of charging structure should be provided, along with average member pot size.

A section on performance should detail how the provider’s trustee board or internal governance committee have assessed the value for money provided by the scheme, why they have arrived at this finding, and include any figures drawn upon to reach this conclusion. It should explain how the provider has taken account of environmental, social and governance risks, specifying when any changes have been made, and whether at a scheme or fund manager level. Entrants should also include details of the investment team’s approach to risk management throughout member journeys, including details of asset mixes employed where appropriate. Judges want to see evidence of the provider’s overall approach to governance.

A section on service should explain how the entrant adds to members’ experience of the pension system, and how it helps employers achieve their objectives. Submissions should include details of how their administration functions have performed against service standards they have set, including during lockdown.

A section on innovation should explain how changes made by the provider in the past year have improved outcomes for members, employers, and/or include details of internal projects designed to improve the company's corporate culture and help staff.

Employee Benefits Consultant of the Year

A section on performance should clearly show how advice given has helped clients improve the value for money provided by their schemes, and advanced their agendas — including where they have recommended consolidation. Entries may draw on individual case studies if desired, but should make some attempt to show how objectives have been met for a wide variety of clients.

A section on service should show how consultancies ensure client satisfaction across their portfolio, evidencing the ability to run projects effectively from start to finish. Judges would like to see that entrants tailor their advice to the specific needs of clients, rather than implementing off-the-shelf recommendations.

A section on innovation should ensure that developments were carried out in 2020, and clearly state the benefit to client, members or the entrant as an employer. Entrants may choose to show how they have helped adapt workplace offerings to the changing preferences and needs of UK employers and employees.

Derisking Provider (buyout, buy-in, longevity swaps) of the Year

A section on performance should include the number of deals completed and total volume of business written in 2020. Additional performance figures are welcome, such as those relating to pricing, and how the company managed risk, including sustainability risks, in its investment portfolio over a difficult year. 

A section on service should show how the entrant has helped clients achieve their objectives over the year, and may opt to give us an example of when the company went the extra mile to help a scheme complete its derisking transaction. It should also mention the company’s quality of service to members, including administration performance figures.

A section on innovation may focus on novel products, investments, or services provided to clients and/or members

Fiduciary Manager of the Year

A section on performance should include evidence of the entrant’s measurable progress in helping clients achieve their investment goals. Client wins and losses for the year should also be stated.

A section on service should explain how the entrant had helped and supported trustees in their non-financial objectives. Submissions should include details of how they have improved scheme governance, provided training and education, and supported trustees through the changing and increasing pension regulation backdrop.

A section on innovation should explain changes made by the fiduciary manager in the last year that have supported trustee boards. For example, reference may be made in areas such as new investment products/asset classes, clearer ESG objectives including climate impact, improved scheme reporting, and adapting to virtual trustee meetings.