With the pensions sector facing up to impending consolidation across the board, the Association of Member Nominated Trustees (AMNT) has voiced concern about member representation in larger pension schemes.
In a session on what good trusteeship should look like at the Pensions UK Annual Conference this week, Maggie Rodgers, a trustee of the Church of England Pensions Board and co-chair of the AMNT, said: “We’ve lost the member voice in a lot of master trusts.”
She added: “While Canada and Australia are hailed as model examples for the UK pension system, any discussion of value for money should include member trustees.”
On consolidation, Sam Ashraf, a professional trustee with Pi Partnership, said: “Consolidation is having an impact, even at the largest size of scheme. We may see different kinds of approaches, such as collective defined contribution [CDC], and that requires different skills.”
Rodgers agreed that CDC was an important development in the pensions market, but emphasised that it was crucial that member-nominated trustees were involved in its adoption. The Church of England Pensions Board is considering launching a CDC scheme once a regulatory framework is in place.
Retaining the voice of the members
The AMNT has long been lobbying for more member representation in pension scheme decision-making bodies, and is concerned that consolidating into master trusts or other large vehicles could dilute this representation.
At the same time, the Pensions Regulator (TPR) and the government are pushing for higher standards of trusteeship. TPR is working on a register of trustees, while pensions minister Torsten Bell this week confirmed that a consultation on trusteeship standards would be issued later this year.
The AMNT’s Rodgers said she would be happy to see registration of trustees, but voiced concerns that formal accreditation programmes would not be flexible enough to support different types of member-nominated trustees, with too much focus on the passing of exams.
“Accreditation not only demonstrates that you’ve got a certain level of knowledge, but gives the individual the confidence that they have what it takes to exist within the trustee board,” said Rodgers.
Regulator outlines five key traits for successful trustees
TPR chief executive Nausicaa Delfas told the Pensions Management Institute’s annual conference earlier this year that trustees must be member-focused, collaborative, and data-led to succeed in the new landscape heralded by the government’s legislative changes. Read the full article.
Professional trustees and impending regulation
One of the focuses of the planned consultation is expected to be the potential regulation of professional trustees. TPR has expressed its desire to introduce a new bill focusing on governance, trusteeship, and administration, as reported by Pensions Expert in August.
The regulator has been engaging with some of the largest professional trustee firms to scrutinise their business models and operations.
Ashraf acknowledged there were market dynamics involved with private equity-owned firms that could influence the way a trustee operates, meaning a degree of self-regulation is required.
Rodgers added that the lines between the roles of trustee and adviser had become blurred in recent years and the conflicts around that must be managed.
Both speakers agreed that while technology – in particular artificial intelligence (AI) – may make some trustee administration tasks simpler, but it is unlikely to fundamentally change the role of the trustee.
“AI is all about knowledge and trusteeship about decision making,” said Rodgers. “It may help you access knowledge, but you still have to make the decisions – though it may have some useful application in member engagement and education.”
