A RAG framework for rating in-house team risk

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Of course, this isn’t scientific at the per scheme level, it could be more or less than this. But for your own scheme, what might happen if you had meaningful staff churn. Especially if those were your most experienced staff? Imagine if hedges are left to drift, assets aren’t rebalanced, benefits are calculated incorrectly, not having enough cash to pay benefits, late accounts, reporting failures and so on. Only examples, but (perhaps) not that extreme.

The trend to buying-in/out for DB and rationalising DC schemes to master trusts may have accelerated this risk. All because the roles and activity expected to meet a different (lesser) need make some reduction in team size/resource inevitable. Meantime though, and in the short term, there may be a bulge of activity just at the time your team may be feeling unsettled.

If this rings true we think People Risk should now be on your Risk Register. So how to rank this risk?

Across Law Debenture (both Trustee and Pegasus businesses) we’ve found a simple Red-Amber-Green framework can be a helpful starting point:

Which statement do you think best characterises your own in-house pension team/situation:-

Green = In-house functions currently appear resilient.

Amber = In-house functions strained with increased (or increasing) risk.

Red = In-house functions not coping and/or significant risks.

There’s a bit more behind this, described in the table:-

A Simple Framework to RAG Rate the People Risk in Your In-House Pension Team.

RAG status	‘Simple’ statement	More detail
Green	In-house functions currently appear resilient.	Low Risk. Well resourced, working well, clear forward planning. Deadlines being met with quality output. Advisers being well managed. Resilient to some churn, may include contingency facility.
Amber	In-house functions strained with increased (or increasing) risk.	People risk now bubbling, with potential to become elevated. Deadlines and quality of delivery/papers under strain. Staff and resourcing model under pressure. Increasing reliance on consultants for support. Prone to (further?) churn. Operating model may need (re-) visiting
Red	In-house functions not coping and/or significant risks.	People/Resourcing risk now realised. Facing visible difficulty in delivering ‘lights-on’ BAU activity. Potential regulatory pressure. Key initiatives (like necessary projects) have stalled. Call to action.

What can you do about this risk?

To help schemes with bubbling or elevated People Risk, Pegasus offers a range of possible solutions, as follows:

Contingency
Modular
Full out-source
Out-source with staff transfer

Again I reference my prior blog for a way to manage these risks which we do see bubbling - we get approached a fair bit now with concerned pensions executives, looking to extend their careers. If you’re experiencing staff churn or having to manage imminent retirement of your most senior/experienced people, please get in touch. There is a way through.