The top priority of almost all UK pension schemes over the next two years is to reduce operating costs, according to research published by Hewitt Associates.
Its Pension Administration Survey 2009 highlights that the current economic downturn is driving UK pension schemes to clearly prioritise cost and quality in their administration processes.
The Hewitt survey polled 143 UK schemes, of which 89% cited reducing costs as their number one priority when asked to name their key focus both now and in the next two years. The survey also identified three other key targets for schemes; improving the quality of administration (69%), sustaining activity (62%) and meeting regulatory requirements (40%).
In an effort to meet lower cost targets, 33% of respondents confirmed that they are currently reviewing their outsourcing strategy. Over half of the respondents cited the opportunity for cost savings, including controlling future and current technology expenditure, as a key reason for outsourcing.
Ian Terry, pension administration business development manager at Hewitt Associates, said: “Shrinking budgets coupled with an uncertain economic outlook are forcing a wholesale revaluation of all service agreements – companies need reassurance that they are being offered value for money. Pension administration is definitely not exempt from the effects of recession and many schemes are treating it as an opportunity to reset their priorities and push for more intelligent solutions and a better deal.
The need to improve quality and services was highlighted as a key reason for outsourcing by almost three quarters of the respondents. More than two thirds (69%) of respondents predicted that improving quality would be one of their three top priorities over the next two years, while 11% said this was their single largest pressure today, and 18% expected it to be their top pressure within one to two years.
Terry said: “As with any service industry, members’ expectations of service continue to rise inexorably. As schemes close and the number of active members decreases, there is increased pressure to provide the means to stay in touch through more use of self-service solutions. It is essential not to alienate members through slow, difficult to access, mediocre or poor service.”