24/10/2011
By Adam Cadle
The closure of defined benefit schemes, increasing administration costs and regulatory requirements are the main reasons for UK and European companies outsourcing pension scheme administration duties according to research from Mercer and Chatham Partners.
A survey of 87 private and public sector companies, in which 43% of respondents were from the UK and the remainder from Germany, Netherlands, Switzerland and Belgium, showed that 45% of companies are looking to outsource in the next three years, with an additional 10% expressing a long term ambition to follow the same path.
Research also revealed 58% of respondents in Europe are planning to outsource, compared to 27% in the UK, with 40% of companies overall wanting to achieve cost savings of over 15% by outsourcing. Improving employee self-service, increasing online functionality and enhancing data mining were also cited as influential factors in the drive for outsourcing.
Mercer’s head of outsourcing for Europe, Africa and the Middle East Jonathan Mindell said: “In a worsening economic climate, we see companies looking for ways to manage their pension liabilities. Outsourcing to pension specialists should minimise the risks of regulatory non-compliance, provide fixed fee certainty, and to ensure that investment continues to be made in the latest processing technology and online member services.
“In the UK, the closure of defined benefit schemes has focused companies’ minds on the long-haul process of asset value assessment, data cleansing and other time-consuming administrative tasks, and the excessive work-loads these will pose for the smaller in-house teams.”
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