Lay trustees have an important role to play in governance and structures as pension schemes merge and scale up, according to the Department for Work and Pensions (DWP).
Speaking at the Pensions UK Investment Conference in Edinburgh this week, Des Healy, policy manager for ESG, productive finance and Value for Money at the DWP, emphasised that the recent consultation on raising standards of trusteeship and governance was not merely an exercise in installing professionals in the role of trustee.
Healy said the consultation – which closed last week – is more focused on governance structures, with a strong theme of the preliminary analysis being the importance of lay trustees.
The Pension Schemes Bill will bring a number of changes for trustees, Healy explained, adding that it was important to ensure there was an appropriate member voice and member representation in scaled-up schemes as the industry moves to a more consolidated market across both defined benefit and defined contribution structures.
“There is space for that lay trustee or member’s viewpoint, to ask the difficult questions that sometimes professionals either don’t want to hear or don’t quite understand,” said Healy.
Gawaine Batchelor, a company trustee at the Aviva Staff Pension Scheme, said that while the focus of the consultation has been on individual trustees, it is essential that the board in total is considered, as that is how decisions are made.
“Have you got the right skills and balance and knowledge across that board as a whole?” said Batchelor. “How do you bring the member perspective to that, and what is valuable in that perspective?”
Clare Routledge, a professional trustee at Vidett, said that while lay trustees nominated by both the company and members can offer useful insights into the employer and members as a whole, she argued that the professional trustee model is increasing diversity.
“Trusteeship is something that people tend to do at an older age, but becoming a professional trustee is now a career choice,” said Routledge. As a result, the professional trustee market is becoming more representative of the UK population as a whole, she said.
“Trustees are getting younger,” added Routledge. “There are more women and people from different ethnic backgrounds, and that brings all those diverse perspectives.”
