If a pension fund is going to succeed in its mission to provide good pensions for members, it stands to reason that all parties involved have to be able to work well together. But a recent report says communication between the parties is weak in the UK, and a different governance model could work better.

"The current trust-based model is hampered by limited dialogue between trustees and their key advisers," the Economist Intelligence Unit concludes in its report ‘It's Time to Talk: the Urgent Need for Dialogue to Strengthen Governance of UK Pension Schemes.'

Though there is a high-level of commitment among pension fund trustees to their role, there is an urgent need for them to talk more often and openly with their sponsors, consultants and asset managers, it says.

Fifty-four pre cent of respondents said the relationship between the scheme and sponsor worked well or very well, that meant a large minority believed the relationship was less successful the report said. And many company nominated trustees had reported been forced to resign because of conflicts of interest, a development which robbed boards of specialist financial knowledge, and a channel of communication with the sponsor, it said.

In the current governance model, there were "fractured" relationships between the key stakeholders, the report said. It suggested a model for the future in which the trustee relationships would be more "inclusive". This would involve direct communication between all the parties, with, for example, asset managers becoming involved in "substantive, scheme-specific dialogue", and systematic monitoring of the employer covenant being instituted.

But Mark Duke, principal at Towers Perrin says communication is just part of the problem.

"Trustees generally have a very tough job," he says. They are finding their feet in a new environment, he says, and gradually working out what they need to ask, for example, as part of their duty around monitoring the sponsor covenant.

"The law now says that funding has to be negotiated between trustees and the sponsor. On both sides they're trying to find the right governance process for this," says Duke.

"I would describe it less as weakness, and more as matters of importance that the parties are trying to get a grip of," he says.

"There is a need for communication because all these parties are in it together," he says, adding that they have to work out what their respective roles are and how they relate to each other.

Trustees are having to address a lot of questions with a degree of rigour they have not have to employ before, he says. "These are still lay people doing their best in a changing environment, that is becoming more complex," he says.

Duke says that while there may be a question mark over whether the trust structure will remain the right one for governing a pension fund, it is still right at the moment. Trustees need time to digest the changes and do what is now expected of them.

"If you want to stop the trust structure that underpins pensions, then you're going to have to allow them some time," he says.