As part of the work we have been doing set up Pensions Mutual and a CDC to provide workplace pensions from the start of 2027, we have been looking at how pension administration looks in the UK.
We started looking at pure systems providers , Lumera and Festina are overseas players who have credentials from delivering CDC in the Netherlands and variants up and down Europe’s West Coast from Scandinavia down. My impression is that they are focussing on DC and DB administration.
We are intrigued by niche players such as Spence’s Mantel supplier which brings us homegrown software that is already in place in integrated administrators such as GPA and Barnett Waddingham but much of what we see from the consultants still looks to be adaptations of historic systems such as Profundi. Aptia alone is advertising itself as a CDC administrator offering.
I suspect that most of the work being carried out at the large consultants – Mercer, Aon and WTW will focus on delivering Retirement CDC from 2028 onwards and that this will not be an accumulation product. Whether the existing DC and DB services will be adapted to deliver UMES whole life workplace CDC schemes remains to be seen.
It’s a time of change, not least in pension admin management. What was JLT/Mercer admin has been bought out by Bain and re-established as Apria, WTW has a new bos 
Aon is keeping quiet but is widely reckoned to be launching its own CDC UMES workplace pension plan which would sit alongside its workplace DC master trust.
That leaves a few slightly smaller integrated administrators who must be considering whether to deliver CDC to rival DC as a workplace pension. Isio have recently brought into the fold Premier Pensions and found a new head of admin , Hymans have recently sold its non core business to Howden while XPS must have a gaping hole to fill having recently lost a big client.
This is all headline stuff!
What of AI?
Into the miasma of pension administration comes AI that is bound to make a stink over the next five years as manual processes get replaced by processes driven by artificial intelligence). The outcomes are still focussed on humans but getting there will need less humans and will be more reliant on what has been learned from systems of the past.
Every conversation we have with pension administration offers us a new take on how systems providers and administrators are coping with the challenge of being de-humanised and I would not be surprised if the first robo- administrator follows the first robo-taxi into production by the end of the decade. If I can put my getting around town into the hands of AI , I can put my saving for and paying of my retirement income.
I discovered the other day just how distant my life had become from paying in cheques. This was a wake up to me that I now expect things to happen without human interaction.
How close are we to administering workplace CDC?
CDC collects contributions like AE workplace DC pensions do. But it pays the build up of pensions as a DB scheme. The tricky bit is the allocation of pension entitlement to those saving for retirement and this will with UMES be based on dynamic pricing which buys entitlement with each new contribution but can increase (or decrease) the value of each pension entitlement according to the state of the fund and of expected future liabilities (pensions).
The system of pricing, valuations and display of pension due (on the dashboard and conventionally) has yet to be cracked by any administrator we have talked to and it looks to me that actuaries, administrators and investment fund managers need to be integrating their offering digitally and not relying on human fallibility! We are looking at the perfection of digital solutions and procuring the means to get it will be a big task for proprietors of CDC schemes – together with their scheme executives and trustees.
We do not want to build in the dark , we will build by corresponding with TPR, Church of England and any other UMES CDC players who appear in the next few months. Administration is one of the big challenges with getting CDC pensions going in the workplace! We cannot replicate Royal Mail though we bless them for opening the door for the next wave of innovation!
