UK pension scheme trustees increasingly face greater challenges - how can they cope?
Pension scheme trustees are having to deal with numerous issues at present in their role:
- controlling increasingly elaborate and complex schemes
- understanding complex investment products
- generating improved returns in a difficult and volatile trading environment
- keeping costs down
- trying to balance having fewer resources yet handle more work
Why does governance matter?
Put simply, schemes face the risk that poor decision-making leads to lower returns which directly impacts scheme's ability to meet member commitments.
What is the Pensions Regulator doing?
The Pensions Regulator aims to drive up standards of governance and administration by focusing on the fundamentals of good governance. There is likely to be a steady stream of new guidance for Trustees to meet over the next few years with more clearly defined standards being imposed.
What do trustees need?
Schemes need to have comprehensive, accurate, conflict-free and timely access to information on their investments, which even in the current climate of increasing transparency and "big data" remains rare.
The ideal governance partner should be able to offer full oversight of the scheme's assets, in particular covering:
independent and accurate valuation of the scheme's investments
timely and regular reporting of the scheme's cash flow
independent measurement of the performance of the assets in comparison to the targets set by the trustees
clear understanding of the total costs to manage the scheme efficiently