Most intermediaries in the corporate pensions space have an interest, if not a desire, to see Personal Accounts go the way of other controversial Government-sponsored administration and technology outsourcing operations, most notably the Child Support Agency. But Xafinity, which has major operations across the pensions piece, wants the system to be a successful one – with itself as the administrator at the centre of that success.
The 1,100-strong organisation consists of three separate, dovetailing business models. Xafinity Claybrook provides software and services for pensions administration, payroll and actuarial valuation. Xafinity Consulting (formerly known as Entegria) speacialises in employee benefits, and Xafinity Paymaster specialises in financial business process outsourcing, providing pensions payments and collections services for hundreds of public and private sector organisations.
Xafinity Consulting is made up of employee benefits operations in London, Reading, Leeds and Birmingham. It provides the full spectrum of employee benefits, covering flexible benefits, strategic benefits, corporate pensions and actuarial services, investment and healthcare. The company also has specialist divisions through which it can deliver learning and development training, as well as an independent trusteeship service.
Xafinity Consulting aims to focus on maximising the value of clients’ pension and employee benefits, specifically using technology to enhance the delivery of cost-effective services. Its client list includes Astra Zeneca, British American Tobacco, British Airways, Fujitsu, Grant Thornton and Sainsbury’s.
With all UK employees to be automatically enrolled into Personal Accounts unless they are already members of an exempt occupational pension scheme, the successful bidder will need experience across a range of pensions disciplines.
Xafinity has submitted it thoughts on how Personal Accounts might work to the Personal Accounts Delivery Authority (PADA), in the form of a white paper which includes sections that address the question of whether it is possible to administer schemes at the 0.3 per cent per annum level suggested by Lord Turner.
“Yes, we believe 0.3 per cent is possible, but it would take some years to get there and it would be dependent on the design of the administrative entity,” Robinson says. “It would demand contributions by direct debit, employers being mandated to provide data electronically and an effective interface with payroll systems.”
What is perhaps less clear is how the Personal Accounts administrative framework might cope with thousands of transient workers from the leisure and services industry and other sectors characterised by high staff turnover, leaving and joining employers’ schemes week-in, week-out. One example of the challenges facing PADA and its partners is the casual overseas worker who spends six months in the UK on the minimum wage, builds up a pot of a few hundred pounds and then leaves the country never to return. Administering that fund for the next 40 years on a charge of 0.3 per cent a year will prove a headache for the successful contractor, even if the millions of larger funds will subisidise it.
Robinson feels this is more a question of policy, and says Xafinity’s take on Personal Accounts has been based on certain assumptions which may or may not hold true when more is known about personal accounts, which he expects will be towards the middle of next year. “When this detail comes out, I think we can expect the number of organisations tendering to administer Personal Accounts to diminish quite quickly.”
But when the stragglers have been left behind, Robinson says Xafinity’s hat will still be in the ring. A former IBM director and self-confessed technology geek, Robinson joined the company 18 months ago and feels he has brought both his technological background and something of a client’s perspective to the role.
“So many sectors, including both technology and pensions, are great at speaking in acronym babble to people, so a very important part of what we do is seeing things from the client’s side and trying to avoid this trap,” says Robinson.
Robinson identifies a number of key trends fuelling continued demand for employee benefit consultants, namely what he describes as the evolution of defined benefits and also the development of the rewards relationships between employers and employees and how this is managed.
Looking at defined benefit, Robinson reminds us that while much of what is said on DBs concerns its demise, final salary arrangements will be with us for another 50 years or so: “When you look into it properly, the question around longevity and its impact into the future will continue to face trustees and employers. Also, when it comes to closing and exiting a defined benefit scheme, this needs carefully managing – how you get people onto defined contributions and flex is a sensitive issue.”
Robinson also hints at a certain maturing of the flexible benefits market, where enabling corporate clients to find new and more effective ways of disseminating important information will differentiate consulting services: “In the past you had ‘The Pension Scheme’ and ‘The Range of the Other Benefits’ but now we are dealing with the overall total rewards relationship where you look at DC and other benefits together. Also, when it comes to communicating certain things – for example, projections showing what might happen to a scheme – it’s possible to use visual modeling tools and bring innovation to actuarial information and show visually what will happen to a scheme instead of giving out a 20 page report.”
On a much broader level, Robinson feels the DC environment demands continued innovation in the way information and guidance on pensions options is delivered to scheme members: “There is the whole question of financial literacy. Under DB the employer could simply tell their employees what they could expect in retirement. Now those same employees can decide how much to pay into what fund, when and what to do with that fund when they retire. This assumes a great deal of knowledge that a lot of people just don’t have. There is an increasing need for employers to give their staff financial skills.”
In terms of what lies ahead for Xafinity specifically, Robinson is not coy when it comes to the acquisitive ambitions of the company, and he says he spends a portion of each working week assessing strategic opportunities and possible partnerships.
He expects there to be further consolidation in the pensions administration market and believes that Xafinity is well-placed to build on the critical mass and economies of scale it already boasts. According to its own statistics, Xafinity Paymaster already administers payments of £6.8 billion to 1.3 million pensioners across 189 countries, in the course of which it process £1.6 trillion in payments, 42 million BACS payments and 100,000 CHAPS transactions annually.
However, Robinson is clear that approaches aimed at growth through acquisition will only be made to the right targets: “The market is ripe for consolidation, but we will only acquire businesses that make sense for clients, employees and our shareholders.”
In terms of the corporate culture at Xafinity, the company says it works from what it describes as its three pillars of “people, process and platform” bound together in an innovative learning environment.
Despite confessing to being a technophile, the 44-year-old married father of two remains focused on putting people first in both his working and home life.
His world vision sees individuals and technology working in harmony. It is a world where mobile technology works as a force for good, allowing Robinson to watch his daughter play netball and finish what work he must after the kids’ bedtime.
“We are blessed with mobile technology and I see it as a liberating force. If people feel enslaved by their Crackberry they can always hit the ‘off’ button. If they find this difficult it’s not because of a problem with technology, it’s a problem with their time management” he says.
Perhaps surprisingly, for a technology whiz effectively at the helm of three businesses, central to his time management system is the paper ‘to-do’ list Robinson works off every day. Also, rather than issue motivational emails from on high, Robinson prefers face-to-face chats with all employees whenever he can, which again goes back to the first of the ‘three Ps’ – people.
“Every day I write a ‘to do’ list, and if there is anything to do with people, whether it’s recruiting or some issue someone’s having, it always must get done first,” Robinson says. “You must always put people first. Everyone likes to feel valued, and if you don’t get that right then everything else will fall down. I always prioritise people, and don’t like to depend too much on formal ways of communicating. I like to walk about the place and see how people are doing.”
He currently lives just outside of Oxford and divides his time between Xafinity’s offices in Reading, Crawley and other locations across the UK, but Robinson’s career has also seen him live in Paris and Hong Kong. He remains a keen traveler. “I like nothing more than putting a backpack on my son’s and my daughter’s backs and going off somewhere,” he says. Recent expeditions have taken the Robinson family to Cambodia, and the next stop for the family will be the Galapagos islands.
Further planks of Robinson’s life are his roles as a non-executive director of Camelot, and sitting on the audit committee of Oxfam. “I think it’s really important for the head of any company to have one other executive role. At Camelot, I get to work with a great executive team who are continually coming up with new ways to bring games to market, and doing so responsibly. They strike a balance between innovation and governance and I consider myself very lucky to be involved with that,” he says.
For Robinson, it seems having a broad range of interests and global experiences has helped inform his attitude to change, which ought to stand him and Xafinity in good stead as the pensions landscape continues to shift: “Change is constant, deep, continuous and it’s always intellectually interesting.”
CV Tim Robinson
“Trust your judgement, no matter what business model you are dealing with.”
Tim Robinson graduated in 1984 from Leeds University with a BSc (Hons) in Physiology and joined IBM as a technical engineer.
He transferred to sales and marketing, in the UK and then in Hong Kong, where he ran a pan-Asian team for three years. He was appointed as a director of IBM UK in 1994.
He became managing director of Silicon Graphics in 1995 and later became chief executive of systems integration company DCS Group.
Immediately prior to joining Xafinity, Robinson was senior vice president and managing director of the security division, as well as a member of the group executive board, of global electronics and services company Thales Group (Paris).
Robinson has served as a non-executive director of Camelot since 2002, a non-executive director of Nasdaq-listed Nice Systems (2002-2005) and is also currently chairman of a European Commission Board on civil security.
Robinson’s guiding principles for success:
• Trust your judgment, no matter what business model you are dealing with.
• Always prioritise dealing with people issues: people come first.
• When in doubt, take more, not less, risks.
National pensions: Xafinity’s take on the New Zealand experience
Launched in July this year, KiwiSaver is a savings initiative designed to make it easier for New Zealanders to save into a pension, and involves auto-enrolment into the scheme via employers.
Savers are able to access their savings when they reach 65, or after five years’ membership, whichever is later. So far, more than 200,000 have enrolled, perhaps lured by the range of incentives for new pension savers which includes a $1,000 cash injection to kick-start an individuals’ pension funds, a tax credit of up to $1,042.86 and, for some applicants, a first home deposit subsidy.
Xafinity has been monitoring the success of KiwiSaver as an indication of how Personal Accounts in the UK might pan out.
Clare Ward, a director at Xafinity Paymaster, says: “The first months of KiwiSaver have been a resounding success, according to Government figures. The UK can learn some lessons from KiwiSaver ahead of the launch of personal accounts. Those aspects which may be transferable and relevant, especially automatic enrolment through employers, are worth keeping a close eye on. In addition there are significant lessons to be learnt from the launch, particularly the systems integration challenges and the way the press was handled”.
While the scheme has been given a warm reception in some quarters of the media, others have noted that with contribution rates at set 4 per cent or 8 per cent of gross salary, this represents a chunk of income many lower-income New Zealanders would struggle without.