Insight & Analysis

Banking on the future: how virtual accounts are keeping billions in pensions contributions safe

Published: Nov 2019

It’s important for any business to get their banking in order. When it comes to banking the pensions contributions of hundreds of thousands of hardworking corporate employees, it adds a touch more responsibility to the process. Here’s how one organisation solved its growth pains.

Two elederly people models on top of stacks of coins

XPS Pensions Group is the largest pure pensions consultancy in the UK. As the only UK pensions specialist listed on the London Stock Exchange Main Market it currently advises over 1,000 corporate pension schemes, administering pensions for over 870,000 members and employing around 1,200 staff across 15 UK locations. Its main role is to look after client pension schemes and their day-to-day administration.

The firm had grown out of a small actuarial advisory business, but with the number of schemes under its administration continually growing – and each pension scheme having a standalone bank account – the legacy manual processes were being tested to the limit, says Peter Robinson, XPS’ Head of Client Banking.

With plans in place for further growth in the administration space, the company knew that its growth rested squarely on its ability to successfully manage those accounts. With the pressure on, a team from XPS went to market to explore what solutions the banks were offering.

“They were all ‘out-of-the-box’ unconfigurable solutions,” recalls Robinson. But with the pensions schemes committed to XPS came more than 300 sets of trustees, each with specific sets of requirements concerning sign-offs and authorisations on their mandates. The evident lack of platform configurability was a major problem because authorisation and access controls around multiple users and mandates had to be managed. “What the banks were offering was not going to fit with what we wanted,” he notes.

Realising that digitisation was something “we had to do”, at this point XPS cast its net wider, taking a look at a number of vendor solutions.


“We spent some time with our short-listed vendors, working through the kind of functionality we needed – making the system scalable and future-proof was essential,” says Robinson. XPS eventually decide to work with the Cashfac Virtual Account Management (VAM) system. The aim was to provide XPS with a single view of its cash and liquidity management, payments and receivables management, and client money management. “The system did require a bit of work to meet our unique requirements, but it was great that we could sit down and build it with them.”

Implementation of the hosted VAM system took about six months. This was longer than normal, given the complexities that needed to be managed. The roll-out, which enabled VAM to be closely integrated with XPS’ accounts systems, saw each iteration revealing the full scope of the firm’s requirements. Here, it was the consultative approach of the vendor’s implementation manager that helped to steer the project in the right direction, says Robinson. He recalls that “although I look back and can see that we had more foresight than we first thought, there were certain aspects that we hadn’t thought about that we were able to incorporate”.

Full control

XPS has three main banking partners, with a fourth coming online soon. Each of those banking partners has various numbers of real bank accounts held within them. Although the firm still has to open real bank accounts for each scheme, as far as administration of users is concerned, it no longer depends on the banks each time it makes a change. “It’s under our control through Cashfac, rather than having to update users through the banks’ systems,” he explains. “This is a real bonus.”

Access to VAM has been enabled for almost 500 users across the XPS network. From here, the administrators have greater jurisdiction over payments, collections and investments, through a single “one-stop shop” view within which they can generate point-of-input analysis for every transaction.

The VAM structure provides a more granular view of client accounts, meaning greater visibility into contributions and cash movements within client fund accounts, explains Robinson. “Because local administrators are now able to interrogate the system directly, rather than having to request information from the accounts team, they are able to respond directly to member enquiries.” As a further efficiency, he adds that virtualising the structure has enabled faster reconciliation of client accounts, and this reduces the chance of breaching client money regulations.

Being a hosted system, the IT resources required by XPS to run VAM are minimal. The company can run its own reports (written, with foresight, at the time of the build – and not yet requiring a revisit), with Cashfac running a number of daily processes on XPS’ behalf. “Just being able to outsource that responsibility has been very useful,” declares Robinson.

System uptime has been solid. “We don’t have any availability issues,” he confirms. Any issues with banking portal access or formatting upload data, for example, sit within the managed services sphere of the contract with Cashfac. Although there are some tight SLAs in place, there has been no need to call them in.

Positive results

Since go-live, there have been a few additions to VAM, such as a link to XPS’ electronic document management system. Since this uses a URL rather than a hard-wired integration, there is no point at which the vendor touches client data, a factor that was vital to get right from the outset.

Small number of changes aside, the system is largely as planned, comments Robinson. Indeed, it’s now delivering to the point where it has become an “integral part” of XPS’ operations. There are plans afoot for the firm to bring onboard public sector pension schemes. These have a markedly different set of administrative requirements, but Robinson has complete confidence that the system’s flexibility will be able to incorporate these changes too.

“The ability to have input into the build in the first instance is why it is doing what we want it to do,” he states. “If we’d picked something out-of-the-box, then we’d always be thinking ‘wouldn’t it be good if we could just…’.” Ultimately, given the continuing growth of XPS, he feels that there is “no way we could do what we do today were we using our old manual processes”. This is good news for all those corporate pensions that depend on successful administration and a clear demonstration to treasurers that even the most complicated bank account set-up is manageable.

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