Changing dynamics for in-house pensions managers
Pensions
With the pensions landscape changing fast, the role of the pensions manager is transforming also. Driven by organisational shifts and the availability of talent, the days of every large business having a multitude of internal resource are over. Jay Solanki, Head of Governance at Isio, explores the factors shaping the future for in-house pensions managers, and asks how specialist services stepping in to support?
The role of the in-house pensions manager is no stranger to change and adaptation. Shaped by factors such as changing corporate strategy or wider economic shocks, major regulatory and legislative changes or technological developments, the role has naturally had to evolve at pace over recent years.
Cassidy Gillaway, Manager at Isio, who was formerly an in-house pensions manager says, “In a world of increasing regulatory oversight, legislative reform and complex projects to manage, there is a growing demand for in-house managers to wear many hats. This ranges from being a project manager, secretary to the trustees, data analyst and relationship manager to complaints handler, technical expert, strategic planner and risk evaluator.”
As the requirements of the role have changed, so have the supply and demand dynamics that underpin how some organisations resource their pensions management functions. Alongside the more structural issues of continued talent shortages and skills gaps in the wider financial services industry, there are other situations that can determine the availability of in-house resource for businesses.
One major factor determining in-house talent dynamics, is where a scheme is in its lifecycle – with those heading for buy-out potentially providing a natural punctuation point for pensions managers considering their next career move. Over recent years we’ve seen a number of pensions managers leave their roles, principally driven by buy-out scenarios. In these situations businesses often need external support to fulfil specific projects or longer-term resourcing gaps.
Growth in outsourcing
The role a pensions manager plays is crucial, but when individuals do leave their role, we’re seeing more and more internal specialism gaps and difficulty in hiring vacancies.
The challenges around securing the right talent, at the right time, have undoubtedly been a contributing factor to the growth in outsourcing over recent years, but there are also a number of demand-side factors which are changing the corporate appetite for external specialist support.
The economic turbulence of recent years has reinforced the focus on costs for many CFOs. Organisations can face operating interruption and not insignificant costs when there is regular turnover of staff (Oxford Economics estimate the cost of replacing an employee to be between 80% and 200% of the employee’s salary). This is especially problematic for smaller schemes, where scarce talent might be tempted by flight to larger entities or bigger brand names. Accordingly, outsourced pensions management can be seen as an attractive option for those looking to reduce the financial burden attached to in-house churn and subsequent recruitment, or simply those looking to reduce the overhead cost of internal staff.
Risk and reward
Managing risk can also be a motivation. Trustees might consider an in-house resource to be something that is marked ‘green’ on the risk register, but the inverse may actually be more appropriate. There might be elements of a single point of risk with an in-house role – if that resource was suddenly long-term sick, or left the organisation without a successor or complete handover in place. Furthermore, outsourced services can deliver companies a greater degree of operational agility based on improved accountability, with known delivery and reporting timeframes part of the contractual service level agreement.
But perhaps the largest contributing factor to the appeal of outsourced pensions management is the capacity it can deliver for schemes and trustees. The ever-evolving regulatory landscape (ESOG, dashboards, and GMP Equalisation for example) is putting more pressure on pensions manager bandwidth. Utilising an outsourced solution can create capacity to focus on longer-term strategic objectives of the scheme. “It’s very hard to do it all as an in-house pensions manager,” says Eleanor Garside, Senior Manager at Isio, who has also previously worked in-house. “There’s so much happening in the pensions world for one person, or even a small team, to stay on top of. At Isio, we have so many fantastic subject matter experts and knowledge champions that the outsourced pensions manager doesn’t have to do or know everything – just who to go to.”
Advising multiple clients provides an opportunity to assess best practice and alternative solutions as well as delivering increased efficiency from familiarity with projects and processes. An outsourced pensions manager function can also provide flexibility for the company, accommodating periods of high and low activity and creating capacity for more strategic development.
Over 150 trustee boards and organisations understand the value of outsourcing to Isio in this specialist area. Our consultants are fast-moving and experts in the highest standards of governance. Providing peace of mind and better outcomes for trustee boards, sponsors and members.
Get in touch today to find out how we can help your scheme meet the complex challenges of today, and the opportunities of tomorrow.
Jay Solanki will be at the 2024 PLSA annual conference at Isio’s stand F9.
Jay Solanki