UK – The average pension fund trustee in the UK lacks the education and qualifications to be an informed consumer of advice and decision-making, according to new Oxford University research.
“The evidence suggests that the average trustee does not have the education and professional qualifications to play the role of informed consumers of financial advice and decision-making (as suggested in the 2004 Pensions Act),” the study asserts.
The comments come in a 31-page paper by Gordon L. Clark, Emiko Caerlewy-Smith and John C. Marshall earlier this month. It’s called “Consistency of decision-making: the effect of education, professional qualifications, and task specific training on the probability judgements of pension fund trustee decision-making.”
“The evidence suggests that, at the limit, training and experience will not make up the difference if trustees come to investment responsibilities without sufficient qualifications.”
There needed to be guidelines about roles and responsibilities that recognised the differences between trustees in the competence and consistency.
“There needs to be a clear understanding about the roles and responsibilities of trustees as representatives of beneficiaries’ interest as opposed to being active decision-makers responsible for fund investment and strategic tasks and duties,” the paper adds.
“While the UK government has not mandated formal qualifications for serving trustees, trustee selection according to education and professional qualifications is an issue that each pension fund and its plan sponsor could consider more closely.”
Schemes could also consider complementing their decision-making bodies with independent experts.
Although the National Association of Pension Funds provided support for the paper, the authors specifically state that it does not represent the NAPF’s views or opinions.
Elsewhere, the NAPF has reportedly called on the government to issue long-dated gilts worth up to £100bn to help ease the pension crisis.
The Sunday Times said NAPF investment council chairman Chris Hitchen has written to the Debt Management Office calling for the DMO to “increase issuance of both conventional and index-linked gilts at the long end of the maturity spectrum”.