Benjie Fraser on the challenge of aligning of sponsors, trustees
Getting multinational corporations and local pensions trustees to see eye to eye can be tricky, says JP Morgan's Benjie Fraser.
Given the size of the multinational corporate pensions market, and corporate sponsors' focus on risk, it is interesting to see how the alignment of sponsor and local pensions trustee seems as elusive as ever.
Taking a step back, this market represents about £1trn (€1.2trn) of pensionable assets. Yet, with some notable exceptions, their reports and accounts rarely make mention of a policy on simplifying governance structures, better reporting or value-for-money ideas.
Perhaps over time that will change as chief financial officers work more closely with their corporate pension managers and human resource experts.
Certainly, as a first step, many CFOs now are requesting greater visibility into this 'network' to better understand the inherent risks involved and the potential efficiencies to be gained.
So what's it all about? Clearly leveraging buying power, solidarity among smaller funds, tax savings (where pooling can be collectively bargained and agreed) and better cost management.
For the providers, it is evident that this journey to consolidating pension arrangements offers both challenges and opportunities.
The key challenge will be the ultimate move by multinationals into cross-border pools, much talked about over the last decade. It still seems logical, so why not?
Dilution of trustee independence? Not necessarily so if the sponsor and trustee are aligned around a common plan for pensions.
Back to the start of our journey, then.
Benjie Fraser is managing director of worldwide securities services EMEA at JP Morgan