Pension scheme trustees should challenge administrators on their strategy for combatting the burgeoning threat of technology debt or they could be running the risk of compromising the future security of members, according to Trafalgar House.

Trustees must challenge their providers to ensure they have a robust technology strategy in place for tackling the threat of technology debt, as members' life savings could be on the line, Trafalgar House managing director, Garry Wake, warned.

Wake explained that technology debt arises when businesses opt for “quick fixes or outdated solutions”, postponing the upgrades and investments needed for long-term stability and innovation.

“Over time, this debt accumulates, creating a substantial burden that must eventually be addressed to maintain operational efficiency and security,” he continued.

“For businesses in the pensions administration sector, the repercussions of ignoring technology debt can be particularly severe.

“Legacy systems, while still functional, often lack the advanced security features and integration capabilities necessary to support modern operational demands.

“Additionally, these outdated systems can hinder the implementation of new functionalities, delay service delivery, and increase vulnerability to cyber threats - all of which have a huge and direct ultimate impact on the member.”

Given this, he argued that, in the fast-evolving landscape of pensions administration, maintaining a robust and secure technological infrastructure was paramount.

However, he acknowledged that like many things admin-related, while the immediate benefits may not be evident, the long-term gains were substantial.

Wake added: “Managing technology debt is not merely an operational necessity but a strategic imperative.

“For businesses in the pensions administration sector, investing in technology upgrades and system migrations, even when they appear costly and yield no immediate visible benefits, is crucial for sustaining long-term growth and security.

“A fortified administration infrastructure that will adequately withstand potential vulnerabilities not only reduces risk but also enables a quick response to regulatory change and makes it possible to leverage new technology as soon as it becomes available making innovation achievable, not aspirational.”

This follows the instance with CrowdStrike last month, a defective update from a cybersecurity company that caused a global outage in Microsoft’s platforms that affected a range of organisations and businesses.

Wake said this “clearly demonstrated the massive fallout that can occur when IT fails”.

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