Imperial Brands’ proposal to disband member forum ‘disappointing’

The Pension Fund Consultative Committee’s main role is to act as a forum for stakeholders to discuss a variety of pension fund matters.

PCCs can act as a helpful sounding board both for employer and trustees – giving a steer on the tone and contents of members communications

Anne-Marie Winton, Arc Pensions Law

According to the Imperial Pensioners Action Call, an independent organisation established to protect the rights of all members of the scheme, the PFCC is considered to be an integral part of the fund’s communication policy.

A ‘surprise’ announcement 

PFCC meetings originated in the early 1990s. The committee includes representatives from all stakeholder groups associated with the pension scheme.

In addition to the twice-yearly meeting, the PFCC also received a full report and presentation from the scheme actuary after each valuation. 

An IMPAC October newsletter stated that the proposal came in the form of “a surprise announcement” from the company’s UK HR manager, who was attending their first meeting on behalf of the company.

They formally tabled a proposal, which stated that the company would cease to convene the PFCC meeting in future, and as a result the committee would therefore be disbanded with immediate effect.

According to the newsletter, the company’s rationale for the proposal was that there had been significant changes to the legal and regulatory environment relating to pensions.

It said the company argued that this, combined with the rules of the fund, now afforded members much greater protection.

“The company also felt that a much wider range of information was now easily accessible to fund members and as a result the benefits gained by holding the forum did not warrant the high workload, cost and logistical efforts required to run the twice-yearly meeting,” the newsletter added.

In response, Bob Chamley, spokesperson on behalf of employee and pensioner delegates on the committee, requested an extraordinary meeting of the committee to be scheduled later in the year in order to allow him time to prepare a considered response to the proposal. This was accepted.

Continuity concerns

Neil Hopkins, IMPAC chair, said the committee “attaches great value and importance” to the twice-yearly PFCC meetings, which are “conducted in a very constructive and business-like manner”.

He noted there has been steady turnover of personnel associated with the scheme in recent months, including four changes to the trustee board, a new HR manager for the UK market and the departure of the scheme’s pensions manager.

“With so many changes in such a short space of time, one might expect that the fund may well be faced with continuity issues,” Hopkins said.

“Therefore, it is extremely disappointing that the company has chosen this time to propose that we discontinue the Pension Fund Consultative Committee,” he noted.

Hopkins added that the PFCC “has provided a common forum for all fund stakeholders to meet and discuss pension issues as well as providing a platform for pensioners to voice their opinions to pension fund management”.

Discussions on the proposal are ongoing, and the newsletter stated that IMPAC did not want to comment further at this stage.

PCCs can eat up time

Pension consultative committees tend to be informal bodies set up to act as an interface between a pension fund, the company and the members, according to Steve Delo, managing director of trustee company Pan Governance.

It is often used as a mechanism to convey information and get member feedback and ideas. “Done well, PCCs are a useful bridge between trustee and membership – done less well, PCCs can be turned into talking shops that devour time with little output,” he said.

“With so many other priorities and demands (and cost items), pensions and HR departments can struggle to justify the time and budget needed to coordinate and supports PCCs,” Delo added.

Furthermore, with pension funds largely closed to new members and future accrual, there is less to engage with for defined benefit schemes. “Defined contribution schemes are therefore an area where PCCs may be more valuable, since member engagement is so critical,” he noted.

Alternatives to PCCs include good use of technology such as online tools, webinars and responsive app-based solutions, Delo said.

“Ad hoc focus groups, established when required for specific purposes, may provide more insight without the governance and secretarial overhead of a PCC,” he added.

Make committee purpose and function clear

Anne-Marie Winton, partner at Arc Pensions Law, agreed that “committees can act as a helpful sounding board both for employer and trustees – giving a steer on the tone and contents of members communications, for example”. 

She said committee members often have a wider geographical spread than on the trustee board, which can make it easier to ensure that members’ views are passed on, irrespective of their location.

However, Winton added that PCCs are not the trustee and have no formal decision-making role. “Care needs to be taken to ensure that they operate within an appropriate terms of reference to make clear its purpose and function.”