Why you shouldn’t be afraid of moving from in-house to outsourced

The shops being filled with ghoulish Halloween goodies have made me think about what’s often seen as scary in my day job - outsourcing! I frequently hear employers and pension trustee boards say how daunted they are by the prospect of outsourcing their scheme secretary, trustee executive or pensions manager role.

The ‘scary’ factor has historically stopped many from taking the outsourcing step. Shrinking in-house resource through belt-tightening or retirement means more and more pension schemes are coming round to outsourcing. Of course, circumstances obliging you to outsource don’t stop the apprehension - but it really isn’t the fright night you think it will be. In fact, it’s usually a positive, valuable experience.

Transition isn’t troublesome…

… at least not when you know what you’re doing, and that’s key. A comprehensive transition program, skilled project manager and experienced team are essential for a smooth, successful and hassle free change over.

We have nearly 15 years’ outsourcing experience I could delve into, but I’ll illustrate what I mean with one recent example. We took on trustee executive and secretarial services from a client whose in-house pension manager and scheme secretary was retiring after over 30 years with the company. Thinking of all that built up knowledge is enough to make anyone feel a bit shaky!

Our transition plan included taking time to read the minutes of the pension trustee and sub-committee meetings over the past three years to pick up important background detail. We also visited all the pension scheme’s main advisers to be introduced to their teams by the retiring secretary and brought up to speed on all current key issues. We scanned all paper documents, transferring them and all electronic documents to a new online trustees’ portal.

Conducting a gap analysis of pension scheme governance documents is critical. In this case, it resulted in a defined contribution (DC) governance review and a new style member newsletter. We also agreed a streamlined process for approving invoices, whereby budgeted fees have a quick path to approval and out of scope work still has a tiered approval process.

Challenges can always be overcome

We were fortunate the retiring secretary was subsequently appointed as a pension trustee, so past knowledge wasn’t lost completely. Even then, getting the information we needed in the transition still required patient persistence. Where you aren’t quite as lucky as this, it is always good to try and agree with the person who is retiring how and when you can go back to them if queries crop up that would benefit from their historical knowledge. This is usually far more efficient than depending on pension scheme adviser records.

We retained existing templates and practices where appropriate, but sensitively introduced alternatives where they added value or improved efficiency, with the pension trustees’ agreement of course. Other challenges included corporate activity and significant scheme changes in addition to business as usual, which we handled by introducing an additional senior team member to manage the scheme changes. I guess that’s another lesson - make sure the team you’re outsourcing to has good strength and depth.

One thing that’s easily forgotten is the softer side of a transition - people getting to know people. You need to devote time and attention to this otherwise the outsource won’t be successful or not successful quickly. One of the first things we did with this client was organise an offsite meeting where we were able to get to know the trustees and their advisers much better without interruption and in relaxed surroundings.

We established excellent relationships with the pension trustees and their advisers, quickly gaining their confidence and respect. It means we are now very much part of their team. There were no nightmares and no nasty surprises - none of the tricks, all of the treats.

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