HR leads push to outsource pensions administration

HR managers are more interested in outsourcing pensions functions following the closure of defined benefit schemes, according to research published today.

A survey from Mercer and Chatham Partners was conducted among 87 private and public sector companies that currently manage their own pension administration in the UK, Germany, the Netherlands, Switzerland and Belgium.

Results showed that in the UK, due to the closure of these schemes along with escalating costs and regulatory changes, almost one-third of respondents (27%) plan to outsource in the near future. This figure pales in comparison to the number planning to outsource in continental Europe, however, which stood at 58%.

A key driver for outsourcing in Europe, along with financial and regulatory considerations, was the improvement of HR services to employees, the report said.

Access to better technology is an additional factor affecting decisions to move in-house administration to external providers in both the UK and the rest of Europe.

Interest in outsourcing pension scheme administration is more prevalent among HR leaders than among their peers in the finance function or on the executive board. One-third more HR leaders than other representatives wanted to outsource their pension administration within the next three years.

Jonathan Mindell, Mercer’s head of outsourcing for Europe, the Middle East and Africa, said: “Overall accountability for in-house scheme administration often falls to the HR function, with the increasing burden it presents for resourcing and compliance. It’s not surprising, then, that HR is keener than other functions to outsource this increasingly complex and challenging area of responsibility.”

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