How to reconcile multiple appointments on governance boards

But given the limited number of potential committee members available, how should providers manage those members who have multiple appointments?

IGCs will be mandatory for contract-based schemes from April and will fit in with wider Financial Conduct Authority rules on governance standards.

The committees must have at least five members, the majority of whom must be 'independent' of the provider and have no conflicting links that would interfere with their ability to serve the member.

However, concerns have been raised over whether members appointed by the company would truly represent the interests of members first and foremost.

“It’s a really interesting one and I’m not sure how I feel about it,” said Ian McQuade, client director at governance consultancy Muse Advisory. He said many IGCs are looking for people who are appointed exclusively to them.

McQuade added: “If you’ve got someone crawling all over you and your organisation, you want to be sure they are totally focused on [your company].”

However, McQuade said there were “clearly some benefits” to committee members having the wider industry understanding that would come with working on a number or schemes.

“Some trustees will sit on a number of boards and will have different advisers, so may hear a number of different angles which may help them with the questioning of advisers and companies,” he said.

There are a number of directors and trustees who have demonstrated an ability to manage these conflicts, but they have to be judged on a case-by-case basis

Alan Pickering, Bestrustees

“It’s so new I don’t think people have come to any decision yet."

However, Richard Butcher, managing director at professional trustee company PTL – which has been appointed to eight IGCs of which Butcher sits on one – said fears were unfounded.

“The insurers are very sensitive to it,” he said. “One clause on my contract is that I declare [any other interests]. I have a contractual obligation, but even if I didn't I would have a moral obligation.”

PTL’s committee members sit on a maximum of two committees, Butcher said.

Managing conflicts

Trustees of pension schemes and non-executive directors of companies often sit on numerous boards. Alan Pickering, chairman of professional trustee company Bestrustees, said multiple appointments could be managed if given proper attention.

“There are a number of directors and trustees who have demonstrated an ability to manage these conflicts, but they have to be judged on a case-by-case basis,” he said.

“The objective should be to get the best person, identify these conflicts and how they may be avoided and, in extremis, if there is no avoidance mechanism you would say that person can’t sit on the board.”

The Department for Work and Pensions last year published its 'Better Workplace Pensions' policy paper, in which it considered “whether it would be possible for someone to be both an independent member of a firm’s IGC and an independent trustee of a mastertrust provided by that firm”. The paper concluded that it should be possible.

Helen Ball, partner at law firm Sackers, said: “What insurers were trying to do, probably quite reasonably, was say ‘this person has quite a lot of knowledge and it would make sense for them to sit [on the board]'.”

Ball added while members of IGCs would be privy to sensitive company information, that would not necessarily preclude them from sitting on committees for other similar companies.

“It’s a commercial conflict rather than a legal one,” she said.