Comment | Association of Member Nominated Trustees
Stand up and be counted Stephen Fallowell
Stephen Fallowell is a committee member of the Association of Member Nominated Trustees
The pension world is evolving and like natural evolution, predicting the final outcome is problemati- cal. Certainly, an observer in the Jurassic period would not have predicted that the small animals scut- tling around the feet of a tyrannosaurus rex would evolve into the dominant creatures on the planet. We now have the ability to engineer evolutionary change through DNA sequencing and genetic manipulation, but are wary of what ‘Brave New World’ we may create. The pension industry is evolv- ing with the market-led initiatives of master trusts, superfunds and collective defined contribution schemes; each feeling that their time has come as companies seek to remove pension liabilities from their balance sheets. The government, confronted with this changing environment of unknown beasts, is attempting to engineer a managed change through legislation and regulation. But what ‘Brave New World’ will be created?
What is missed in this interplay are the views of the people who should be the main players in this arena; the members of the pension funds and their chosen representatives. Member nominated trustees and employer trustees are the thread of DNA that has provided continu- ity throughout the evolution of pensions in the UK. They are the natural and critical link that ensures that the needs of the members are met. Within the envisaged changes there are proposed moves to remove that link; supposedly due to the practicalities of incorporating trustees and the technical expertise needed for the new environment. These proposals are like scientific genetic modifications without the social or ethical considerations. A ‘Brave New World’ indeed! In 2017, the regulator recognised the changes impacting upon trustees and published guidelines as to how 21st century trustees should manage a fund successfully. These included: – Clear roles and responsibilities and clear strategic objectives – A skilled, engaged and diverse board led by an effective chair – A robust risk management framework focused on key risks Such guidelines may take resources to monitor and regulate, but having acknowledged the need, it seems somewhat perverse to then seek to make trustees extinct rather than nurture them. In Agatha Christie’s novel Why didn’t they ask Evans? published in 1934, the resolution of the murder mystery revolves around the simple fact that a key witness was not consulted allowing the murderer to escape undetected, until two amateur sleuths asked the right question. There is an inherent danger that the opinions of the very people who are dependent on pension funds are drowned out in the cacophony of regulations and solutions. Pension funds invariably have diffi- culties in gauging the opinions of their members. However, there remains one resource that contin- ues to be the focus for members; the member nominated trustee and we always remember to ask Evans.
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14 | portfolio institutional | March 2019 | issue 82
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