Assessing your service provider is no longer a nice to have for pension funds, but is now an essential part of good, effective governance. The main regulatory bodies for pension funds in the Dutch, UK and German markets have highlighted the importance of holding service providers to account. This responsibility cannot be outsourced by trustees who are ultimately accountable for the pension funds’ ability to pay their members’ pensions.
The DNB (Dutch National Bank) states on their website that “financial legislation conditionally allows financial institutions and pension funds to outsource activities to third parties. The conditions attached to outsourcing of activities have the purpose of managing the relevant risks and ensuring that outsourcing does not impede adequate supervision” further emphasising the importance of controlling and assessing the services of the provider. The TPR (The Pensions Regulator) also states that “Trustees should have controls in place to ensure the Fund /Scheme maintain an effective working relationship with all your advisers and service providers. This should include a process to regularly evaluate their performance and service."
Again, we see that the regulatory push for holding a pension fund's service providers to account shows the importance of doing an exercise to evaluate the quality of the provider's service. This in turn can help ensure effective governance of the pension fund, which is clearly in the best interest of its members.
Avida has a long track record in supporting its clients in managing key third party providers. These include investment consultants, fiduciary managers, custodians and pension administrators.
If you want to hear more about our AIGS tooling, please join us for a live demo on the 20th of October at 2 PM GMT by Paul Boerboom.
