The Pensions Trust has anonymised its trustee board elections in a controversial attempt to create a more diverse board, as schemes work to improve representation on male-dominated governance bodies.

This week the new pensions bill had a second reading in the House of Commons, the first opportunity for members of parliament to debate its main principles.

Not a huge amount of MPs took up the offer to debate with pensions minister Steve Webb on his vision for the future of pensions: 

Employers' interest in CDC only surpassed by MPs' interest in pension schemes bill pic.twitter.com/5jCXucU1mu

— Ian Smith (@iankmsmith) September 2, 2014

"The pension schemes bill will improve the system in two ways," said Webb. "It will give people much greater flexibility on how and when they access their savings, and it will enable innovation in the pensions industry, to better meet the needs of businesses and individuals.”

The minister answered questions on how small and medium-sized companies would be incentivised to implement defined ambition schemes and how these schemes would be regulated.

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It seems we have reached a tipping point where defined benefit is no longer the most common pension arrangement of FTSE 100 companies.

I have long said that focus on the adequacy of an employer's defined contribution offering will happen once senior executives are relying solely on such provision.

But it appears I may be proved wrong, as many executives now have a combination of pensions arrangements that include DC, DB and cash, due to the decrease in annual and lifetime allowances.

According to the Trades Union Congress’s annual PensionsWatch survey released today, 64 per cent of senior executives now receive cash as part of their pension provision, up from 29 per cent in 2011.

In April, the lifetime allowance was decreased to £1.25m from £1.5m. And the annual allowance was decreased to £40,000 from £50,000.

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Any other business: The prime minister is not the only one facing questions over diversity. A quick glance around the pensions industry shows white, middle-aged men make up the majority of trustee boards.

Responsible investment has been something with which many trustees have struggled. Although trustees are under fiduciary duty to provide the highest returns for members, the impact of investments on wider society and the environment has become increasingly important.

However, the approach to such responsible investment has been different. Some schemes have used the exclusion method – not investing in companies, such as arms manufacturers, that can have a negative impact on society.

Others have decided to remain invested in companies in order to engage with the board, which could result in better governance and therefore better returns. 

It has been reported that Archbishop Desmond Tutu has waded into the responsible investment debate. He has written to Dutch super-pension the €309bn (£246bn) ABP to ditch its investments in three Israeli banks – Bank Hapoalim, Bank Leumi and Mizrahi Tefahot Bank.

According to Reuters, the Nobel Peace Prize winner wrote to the scheme’s board saying the investments “enable the expansion of Israeli settlements on occupied Palestinian territories, and profit from the illegal seizure of this land”.

He continued: “Your board has a choice – continue to turn a blind eye to the facts and claim ABP investments are somehow ringfenced from bolstering Israel's occupation, or join the growing movement towards divestment, which will reduce the company's risk, respect international law and strike a powerful, non-violent blow for peace in the Middle East.”

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The Pension Protection Fund will publish in October the conclusion of its consultation on making the certification of contingent assets more transparent, after around half a sample of type A contingent assets failed a stress test.

Consultancy LCP yesterday released its Accounting for Pensions 2014 report giving an insight into the pension arrangements of some of the country's biggest companies. The report at times paints a bleak picture for defined benefit schemes. 

According to the report there are currently no FTSE 100 companies that offer a traditional final salary scheme and only four companies now provide any type of DB provision for new employees.

They are Diageo, Johnson Matthey and Morrisons, which offer a cash balance scheme, and Tesco, which offers a career average scheme.  

Four companies closed their DB schemes in 2013 and three have agreed to close their schemes to further accrual in the near future. 

In 2013 the total pension contributions by FTSE 100 companies fell to £20.2bn from £21.9bn in 2012.

Source: LCP

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