A new pension landscape?

Martin Palmer, Head of Corporate Pensions Marketing, Friends Provident

With the election only a couple of days away, predictions of what is going to happen in the pensions arena are everywhere. Debates on the pensions deficit, NEST, early access to retirement funds: it is difficult however to get a clear indication of what is going to survive the outcome of the election and become a policy.

One thing is certain though – the pensions landscape will continue to change and as pensions providers we need to be prepared for that.

Technology and investment into technology play a big role in staying one step ahead. Our new Corporate Investment Platform uses technology to empower employee benefit consultants and corporate IFAs to help trustees of Defined Benefit as well as Defined Contribution schemes to optimize their investment strategy.

Corporate investment platforms use a single administrative platform to provide trustees with the ability to access a comprehensive range of investment managers, fund and styles. They allow the creation of bespoke blended funds and automate the trading and management of underlying funds, improving reliability and certainty of transactions. The platform automatically generates management information and thus helps with governance issues.

But trustees are not only responsible for scheme governance but also for setting suitable investment strategies to ensure that returns are appropriate for the scheme. Ascertaining that this strategy is followed is often a different challenge altogether. This is where a corporate investment platform can really help. The ability to blend selected underlying funds into a forward priced single fund and the ease of adding new funds provides confidence and clarity that plans are being adhered to. On top of this, automatic and manual rebalancing options make it a lot easier to follow a scheme’s investment strategy.

Straight-through processing (STP) is one technology that has revolutionized pensions and pensions administration. More than 10 years ago we put our faith in technology and launched the first STP under our New Generation Personal Pension proposition. Our Corporate Investment Platform is building on this heritage and in the institutional investment world STP doesn’t only ensure timely investment of assets but also that fund administration doesn’t become a risk in itself. Minimizing the potential for manual error means this risk is greatly reduced.

What is really great about all this, is that it means that investment strategies can be more flexible – allowing a wider range of fund managers to be available as well as the flexibility to build bespoke fund of funds and blended fund options.

Out of market risk is another big issue for corporate investments. In a ’you’re damned if you do/ you’re damned if you don’t’ way, it is important that once the decision has been made to buy or sell, the transfer is executed as quickly as possible. The corporate investment platform minimizes any delay and whenever possible deals are executed on the same day. In addition, all funds on the platform have the same pricing approach and dealing cycle further improving efficiencies in switching funds.

To make the right decisions advisers and trustees need to have the right information at their finger tips. With a corporate investment platform, the system provides touch button management information as well as better fund reporting and performance management. This not only gives a holistic overview of performance, but also increases the confidence in the system through greater transparency.

Flexibility through technology is certainly the way forward to ensure pension scheme investments are managed in the best possible way. Looking ahead corporate platforms can ensure that employees have the freedom and confidence to plan their life journey. What we need from our politicians is a long-term savings policy that gives people the confidence to save.