Cyber weaknesses threaten pensions integrity, Trafalgar House warns

Trafalgar House, a specialist third-party pensions administrator, has warned that cyber resilience and inconsistency represent the weakest link in the pensions sector — one that can no longer be ignored.

The Pensions Regulator’s recent Market Oversight Report on administrator relationships underscored a growing concern, that pensions administration is no longer a simple back-office function. It has become a strategic risk, a regulatory focus and, when managed effectively, a key driver of better member outcomes.

However, the report also revealed a widening gap in cyber resilience across the market. Daniel Taylor, client director at Trafalgar House, said that while some administrators have adopted mature frameworks supported by regular penetration testing, proactive governance and certifications, others remain far behind. 

He also noted that this inconsistency poses a fundamental threat to the security of millions of savers’ personal and financial data, effectively creating a “weakest link” system within the sector.

Taylor urged the industry to move towards a coordinated, market-wide approach to cyber resilience and operational readiness, calling for standardised frameworks, stricter accreditation and more support for smaller or less mature administrators. Without such action, he warned new regulation could accelerate market exits at a time when consolidation is already reshaping the pensions landscape.

The concerns raised have implications that extend beyond pensions. For the insurance industry, particularly those active in pension risk transfer, cyber insurance, and operational risk management, weak cyber practices among administrators could heighten exposure to data breaches and operational failures. Insurers engaged in buy-in and buyout deals depend on the integrity of administrator systems; any cyber incident could delay transfers, create new liabilities, or damage trust among policyholders.

Moreover, the issue could spur rising demand for cyber insurance products tailored for pension administrators and trustees, though insurers may respond with tighter underwriting standards or require higher proof of cyber maturity. Regulators such as the Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA) may also extend similar expectations across the financial sector, including insurers, to ensure operational resilience and reduce systemic risks.

Taylor concluded that the industry’s challenge is not only technical but cultural: “Cyber security and operational resilience aren’t optional extras — they are the foundations of a functioning pensions system. If we talk about administration as critical to member outcomes, it’s time to act like we believe it.”