UK - The Personal Accounts Delivery Authority (PADA) has launched its procurement process for services, to establish the new system of personal accounts, with a search for a scheme administrator.

Tim Jones, chief executive of PADA, revealed the scheme administration contract, or 'contract set B', is the "largest and most complex of the procurements associated with bringing personal accounts alive".

The different services required by PADA have been combined into five 'programme sets' that will be put out for tender by the organisation, with 'set A' covering different services the trustee corporation - once it is set up - will need to procure.

In addition to the scheme administration services in set B, programme C will cover the fund administration and custodianship including the technical parts related to record keeping and fund management, while set D is the fund management portfolios itself and the final set of services, programme E will focus on services for annuitisation including the development of a provider panel.

Jones said PADA is tendering the scheme administration contract first as it is believed these services would take the longest period to both appoint a provider and to design, build and set up the administration system.

The tender will be issued as a competitive dialogue, as PADA wants to meet potential providers and get a "sense of what they think the solutions are through an ongoing dialogue".
PADA revealed the responsibilities of the successful candidate would include:

Employer participations - Provision of scheme information; receipt of employer data; agreement of payment schedules; Automatic enrolment - opt-ins and enrolment of self-employed; Collections and reconciliations - contributions from employers and members; contributions limit; handling late payments; Cash management - refunds; aggregating contributions; Accessing pension savings - retirement options; purchasing annuities; trivial commutation, and Administration of account - updating records; compliant handling, divorce and dissolution.

In the first phase of the tender process providers will be invited to complete a Pre-Qualified Questionnaire (PQQ) by 26 February 2009, which includes questions about the suppliers' financial standing and technical capability on other large projects, once these have been assessed PADA will select a shortlist of between 3-6 suppliers in April to enter into competitive dialogue.

Following this dialogue PADA will update the specifications of the contract and then invite final bids against the criteria, which will then be shortlisted to around three firms before the contract is awarded in the first half, or the end of the first half, of 2010.

Jones pointed out while personal accounts will not have an advantage over other occupational schemes he admitted there were some differences, in particular that the scheme will involve "hundreds of thousands" of employers, rather than just one, and the organisation "needs to see how that would affect the administration".

He also highlighted the decision to introduce a contribution cap of £3,600 will raise some issues for the administration as the cap applies to members across all their employment but employers are required to make contributions based on their individual employees.

Jones said: "It is interesting to see how you work through that solution. We think we have one and that will be outlined in the contract specifications."

PADA said in an attempt to keep the new regime simple and to minimise costs to both employers and members the "provision of services will generally be through e-channels, including the internet, email and SMS".

Ahead of the tender notice, PADA revealed it has undertaken significant market engagement including more than 200 meetings with companies across three continents, while a prior information notice (PIN) published last year led to 20 responses and almost 60 companies attending a procurement event that has helped to "gauge the level of supplier intent". (See earlier IPE article: PADA to start administration search in 2009)

Jones confirmed PADA has been "talking to people actively engaged in the administration of multi-million member schemes in Europe and elsewhere".

The length of the contract will initially be 10 years, with the option of an extension of up to five years, at which point the contract will be re-tendered.

Importantly, while it is anticipated the contract will not be split, PADA suggested some firms may join together to submit a bid, and while the different companies might deal with different areas it would be presented as a single bid.

Jones said: "PADA will be seeking suppliers who can demonstrate value-for-money services provision that are secure, innovative and sustainable. I look forward to engaging and working with suppliers who have the same passion and commitment as we do."

PADA has meanwhile confirmed it is also working on its brand strategy, which will go through the Central Office of Information (COI), so it is expected both the brand and the name of the new pension scheme will be available by the end of 2009.

The organisation is also focusing on its investment consultation, which is expected between March and April 2009, and PADA also revealed the document "will be exploring the idea of a guarantee" on returns as part of a very large debate.

If you have any comments you would like to add to this or any other story, contact Nyree Stewart on + 44 (0)20 7261 4618 or email