If you are looking to improve the running of your pension fund, hiring the chief executive of the Pensions Regulator is a pretty good place to start.
s head of the regulator, Bill Galvin made no bones about the advantages of scale to both defined benefit and defined contribution governance, so it is fitting he has ended up at the £34.2bn Universities Superannuation Scheme.
“Large, well-governed schemes like USS are the best model for pensions delivery in this country,” said Galvin in his new role.
It was only a few weeks ago we reported on how scale and expertise helped the USS pursue a private equity strategy that smaller schemes could only dream about, including reducing fees and improving long-term value through co-investments.
But even for a fund as well-resourced as the USS it seems clear this will be no easy job. The technical provisions funding level of the scheme was 92 per cent in March 2011, which had slumped to 77 per cent by March 2012.
Over this period the liabilities increased by 24 per cent, while assets only increased by 4.4 per cent (source: the scheme’s 2012 accounts). This will not be a surprising story for those following DB schemes over the past few years.
This issue of Pensions Week takes a look at how the investment and funding committees at Lloyds TSB and Unilever are implementing the regulator’s wishes for an integrated financial management plan (pages 10-11).
What is refreshing from these case studies is the constant evolution of the decision-making framework at these schemes, to deal with a harsh economic climate for those trying to push along a derisking strategy.
On pensionsweek.com, the latest issue of PW Review tackles the critical issue of trustee understanding from the ground up – how can you make sure trustees understand the investments they are making on behalf of members?
Getting the right structure for decision-making, and getting the decision-makers up to scratch – two challenges that will be familiar to the USS’s new boss. We look forward to following his progress.
