One of the most persistent governance challenges in the retirement fund sector is the misunderstanding of the respective roles of trustees and administrators.

Because fund administrators perform most operational activities, trustees sometimes assume that responsibility for those activities has also been transferred. Under the Financial Institutions and Markets Act, however, this is not the case. Trustees retain fiduciary responsibility even where administration functions are outsourced.

In the previous newsletter, we presented the first five; in this newsletter, we present the last five responsibilities most frequently misunderstood in practice.

6. Administrators manage member records, but trustees must ensure data integrity
Administrators maintain the member administration systems and databases. Nevertheless, trustees must ensure that:

• data management systems are reliable
• member records are accurate.

Poor data integrity can lead to incorrect benefit calculations and regulatory compliance risks.

7. Regulatory reporting is often prepared by administrators, but remains a trustee responsibility
Administrators typically prepare regulatory reports and filings, but trustees remain responsible for ensuring that:

• reports are accurate
• submissions are made on time.

Trustees should therefore receive regular compliance reports from administrators.

8. Trustees must monitor operational risks
Administrators manage operational processes, but trustees must ensure that operational risks are controlled.

Examples include:

• benefit miscalculations
• delayed benefit payments
• system failures.

Trustees should regularly review operational risk reports.

9. Cybersecurity is not just an IT issue
Administrators operate the systems used to manage retirement fund data. However, trustees must ensure that administrators maintain appropriate cybersecurity controls.

Cybersecurity risks are increasingly important because administrators hold large volumes of personal and financial information.

10. The principal officer plays a critical governance role
The principal officer acts as the link between trustees, administrators, and the regulator.

This role is sometimes underestimated. In practice, the principal officer is often the first point of contact for regulatory matters and therefore plays an essential role in governance.

The key governance principle

A simple rule can summarise the relationship between trustees and administrators:

Trustees govern. Administrators execute.

Trustees retain fiduciary responsibility for the retirement fund, while administrators provide the operational infrastructure required to implement trustee decisions.

Understanding this distinction is essential for maintaining strong governance and protecting the interests of retirement fund members.