Nearly three quarters (70 per cent) of pension schemes view capacity constraints within scheme administrators as the biggest risk to timetables for moving schemes to buyout and wind-up, a poll from LCP has revealed.

The poll, conducted during a webinar on the pension risk transfer market, asked attendees what they saw as the biggest risk to the timetable for a transition to buyout and ultimately winding up their pension scheme.

Over 70 per cent of the 90 responses said that delays in their administrator completing data cleanse work, including guaranteed minimum pension (GMP) equalisation, was the biggest concern.

This was followed by insurer operational capacity, which was highlighted as the biggest risk by nearly 20 per cent of respondents, while very few respondents cited other issues such as member complaints or surplus distribution as the biggest risk to timetables.

LCP acknowledged that recent "bumper" activity in the pension risk transfer market is creating high demand for administrators to complete complex data cleansing projects either to prepare schemes for transactions or move them to buyout post transaction.

And with schemes implementing GMP equalisation projects and undertaking detailed work to prepare to connect to pensions dashboards, LCP warned that there is a "clear risk" that schemes get caught in bottlenecks due to lack of bandwidth at administrators.

LCP partner and head of its post-transaction team, Rachel Banham, commented: “One of the biggest challenges currently facing the pension industry is capacity within pension administrators.

"They are under huge pressure to deliver a number of complex and often overlapping projects across buy-ins, pensions dashboards and GMP equalisation.

“Our poll highlights the depth of concern from trustees and sponsors regarding the risk of long delays and additional costs due to lack of administration bandwidth.

"The pressure is only set to grow as more and more schemes move to full insurance over the coming years.

"Schemes need to engage early with administrators and agree a well-defined, actionable plan for the work required. Specialist post-transaction support is crucial to manage this process actively and avoid cascading delays affecting overall timetables and spiralling costs.”

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