The following insights reflect patterns we see repeatedly in practice and draw on our long-term observation of the UK pensions administration market. This is informed by two decades of independent research, operational engagement, and governance-focused advisory work with trustees and providers. Since 2009, this has included carrying out administration market surveys, providing us with a consistent view of how operating models, capacity and service delivery has evolved.

For trustees, consolidation in the pensions administration market is often experienced indirectly. Changes tend to occur outside the scheme’s immediate control, through provider mergers, ownership change, platform transitions or market exits. Yet their consequences are felt directly in service continuity, data integrity and member outcomes.

Historically, trustee governance of administration has focused on service performance within an established provider relationship. In a more stable market, this was often sufficient. Today, however, structural change in the administration landscape means risk increasingly arises from how administration is owned, organised and resourced, not solely from day-to-day service delivery.

As providers consolidate and operating models evolve, trustees are more exposed to risks sitting upstream of traditional oversight mechanisms: capacity constraints, transition risk, and decisions taken at group level that may reshape delivery without a formal re-tender or decision point. These risks are not visible through standard reporting, but they can have material implications for scheme stability and member experience.

This section considers how trustees should interpret these market dynamics through a governance lens. It explores why scale does not automatically equate to stability, how ownership complexity changes the nature of oversight, and why market exits are increasingly relevant to trustee risk management, even where a scheme’s own administrator appears unchanged.

Stability is not Scale

One of the most consistent patterns we observe is structural stability is often a better indicator of service continuity than organisational size. The five remaining firms without any structural change are a real mix in terms of size from large Employee Benefit Consultancies (EBC’s) to smaller EBC’s and two stand-alone administrators.

Administrators which have avoided repeated ownership change, platform migration or operating-model redesign typically:

• experienced fewer disruptive transition events
• retained scheme-specific knowledge for longer
• operated within more predictable delivery frameworks

From a governance standpoint, this matters because trustees ultimately manage operational risk, not brand strength. Size may offer financial resilience, but it does not remove the execution risks associated with consolidation.

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KGC Insight:

Trustees should treat frequent structural change as an operational risk factor to be actively governed, rather than a neutral commercial event. The market is very acquisitive, and we believe more change is on the horizon. Attrition rates of administrators’ employees should be of interest. We are all aware of the capacity and resourcing issues, further changes in the market will continue to impact these.

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Ownership complexity has governance consequences

The market has increasingly moved towards group ownership structures, carve-outs and spin-offs. In many cases, trustees now contract with an administrator whose:

• strategic priorities are set outside the administration function including decisions around investment, systems, pricing, future acquisitions and/or exit strategy
• investment horizons driven by group or shareholder objectives
• operating models are subject to future change beyond trustee control

The organisation delivering day-to-day services to a scheme is often not the organisation making the most important strategic decisions about administration and this separation creates governance risk if it’s not properly understood and managed.

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KGC Insight:

While these structures are not inherently negative, they create governance blind spots if not explicitly addressed. Trustees need greater clarity over:

• where administration sits within their provider’s wider group
• how future ownership change is managed operationally
• if they find their provider is part of an acquisition, what protections exist during periods of transition

Even where long term relationships and stable Business As Usual (BAU) service exists, trustees may still be exposed to a re-location of services, disruption through the integration of newly acquired clients and cost driven model changes. They could be exposed to all these risks without a re-tender, formal decision point or influence.

Administration oversight is not about SLAs; it’s about understanding who ultimately controls the operating model and mitigating the associated risks.

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Market exits are a feature, not a failure. But they are not consequence free

The withdrawal of well-known firms from pensions administration reflects a structural reality – administration is operationally demanding, margin-sensitive and risk-intensive. We are already experiencing a shortage of experienced administrators and when a provider exits the market, capacity does not always reappear elsewhere. This then has a domino effect on capacity restraints for BAU and all other projects demanding attention, coupled with growing regulatory and data demands.

Exits and acquisitions therefore warrant enhanced trustee scrutiny of continuity, data ownership and transition governance.

From a trustee perspective, exits should not automatically be read as negative. Governance usually takes the form of performance monitoring, breach reporting and SLA compliance but a provider exit shines the light on data ownership, continuity planning and market capacity awareness. All of which are not always consistently applied or stress tested. Most of the time, responses are made quickly and without the benefit of a more structured review.

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KGC insight:

To date, much of the market has optimised for commercial efficiency rather than operational resilience. However, regulatory focus is now extending beyond day-to-day administration quality to include financial resilience and continuity of service. The Pensions Regulator (TPR) has also turned its attention firmly towards the administration ecosystem, evidenced by its updated Administration Guidance released in December 2025.

When an administrator exits or reshapes its presence, trustees should focus less on why and more on how the transition is governed, including data integrity, resource continuity and accountability during change. Capacity risk should be considered alongside covenant and funding risk. Trustees should also consider what they would do if their current provider exited the market.

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Trustee perspective: bringing governance upstream

Taken together, these observations highlight a shift in where administration risk now sits for trustees. In a consolidated and continuously evolving market, the most material risks increasingly arise outside the day-to-day service relationship, shaped instead by ownership structures, operating model change and market capacity.

Traditional oversight mechanisms remain necessary, but they are no longer sufficient on their own. Performance reporting and SLA monitoring tend to reflect outcomes once change has already occurred, whereas many of the most consequential risks now emerge earlier – when providers consolidate, exit, reconfigure or rebalance investment priorities at group level.

For trustees, this does not imply consolidation is inherently problematic, nor that size or scale should be avoided. It does, however, underline the importance of understanding how an administrator’s stability is created and maintained, how future change is governed, and where trustees sit in relation to decisions which may materially affect delivery.

In this context, effective trustee governance increasingly requires a broader, more upstream lens. One considering structural stability, ownership complexity and market exits as core components of operational risk management, rather than peripheral market activity. The challenge is not to predict change, but to ensure governance frameworks are robust enough to accommodate it.

The next article considers consolidation from the administrators’ perspective, examining how peer behaviour reflects operating reality across the market.