Key Person Risk: The Challenges of a Sole Pensions Manager

Understanding key person risk in pension management

Many pensions managers expect to spend their careers in-house. However, being a lone ranger and taking sole responsibility for a company’s pension scheme comes with significant key person risk. When a pensions department consists of just one individual, your organisation is left vulnerable to key person risks that can impact governance, compliance, and continuity.

Single point of failure

As a sole pensions manager, you’re responsible for a wide range of tasks, from maintaining the risk register and updating the business plan to setting the annual budget and handling member queries – sometimes from individuals who left the company decades ago.

If you are unavailable due to illness, leave, or resignation, crucial functions such as regulatory compliance, financial transactions, and member communications can be delayed or even neglected. Without proper contingency planning, trustees, company executives, and scheme members may experience significant disruption. This is a prime example of key person risk in action.

Knowledge concentration

When pensions expertise resides with just one person, there is an inherent risk of losing critical knowledge if that individual leaves. Institutional knowledge, procedural insights, and key contacts may not be well-documented, making it difficult to ensure a smooth transition. New hires may struggle to bridge the gap quickly, leading to inefficiencies and increased risk.

Lack of succession planning

With a single-person pensions function, succession planning often remains an afterthought. Without a clear plan to transfer responsibilities in case of departure or an emergency, your organisation may find itself scrambling to maintain stability. The absence of structured knowledge-sharing and handover processes can create unnecessary challenges for trustees and employers alike.

A better approach: The value of outsourced pension management

Recognising these challenges, one former in-house pensions manager made the decision to transition from a sole role to a team-based environment. Despite enjoying the organisation, working well with the trustees and advisers, and benefiting from a short commute with flexible working arrangements, the weight of sole responsibility became unsustainable. The logical next step was to recommend outsourcing the pension management function.

The solution proved beneficial for all parties. With deep knowledge of the scheme and a move to Dalriada’s highly regarded Pensions Management team, a seamless transition was possible. Instead of relying on a single person, the pension scheme gained access to a structured, multi-skilled team, ensuring resilience, efficiency, and expert governance.

Case study: From sole responsibility to shared expertise

Curious how this looks in practice? Discover how an in-house pensions manager facing similar challenges made the transition to a team-based model – improving resilience, governance and long-term sustainability.

The advantages of a team-based approach

As part of Dalriada’s Pensions Management team, work is distributed strategically across specialists at various levels. Senior pensions managers can focus on high-value advisory work while skilled colleagues handle essential operational tasks – such as preparing board packs, managing adviser invoices, and maintaining regulatory logs.

This structured approach not only mitigates key person risk but also ensures that costs are allocated appropriately. You benefit from expert oversight while routine administrative tasks are completed efficiently by the right level of resource, leading to both better service and cost-effectiveness.

Take action to secure your pension scheme

If you’re currently managing your pension scheme alone, it’s time to consider a more sustainable approach. Outsourcing to a dedicated pensions management team like Dalriada’s ensures continuity, governance, and efficiency – allowing you to focus on delivering the best outcomes for your scheme.

Explore how we can help you mitigate risk and future-proof your pensions function.