Sections

PWC says UK trustees lack governance aims

UK - PricewaterhouseCoopers says 85% of trustee boards of large UK pension schemes do not have individual governance objectives.

Andrew Evans, chairman of the firm’s national pensions audit practice, said the figure is alarming. “It’s a very high percentage. I would have expected between 30% and 40% to be looking at governance issues.”

The findings come in a climate where the government is seeking more expertise from trustees and where senior industry figures are questioning trustees’ role.

The survey of 66 chairmen of major UK pension schemes also found that 65% did not have a governance policy or if they did it was not used for decision making. In addition, only 46% assessed the performance of advisers and delegates.

It also noted that many of the changes that a number of trustees have already introduced to enhance governance have not been formalised and documented. Only 40% of trustee boards documented their discussions and decisions reached with the sponsor.

The study also found that 45% of trustee boards have not reviewed their knowledge and skills in respect of pensions.

The findings lead PWC to conclude that trustee boards of large pension schemes find it difficult to identify and implement changes to improve governance. When they do identify the steps they do not always have the necessary skills and resources to achieve effective implementation.

So are trustees up to the task set out in the new pensions bill that is currently before parliament? “Not at the moment,” says Evans.

“In two years time all the schemes in this survey should have a governance policy,” he continues. “All schemes should have assessed the skills that they have, and have some form of objective performance assessment of themselves as trustees.”

Evans’ concern is that some chairmen might say that they are too busy with actuarial and funding issues to spend time on governance. “That would be a real mistake,” he said.

Evans viewed the future with optimism: “I have been pleasantly surprised at the level of interest shown,” he noted. “Trustees are seeing the scheme as much more like running a business, and that was not the situation a few years back.”

“It is interesting how few chairmen have realised that conflict of interest is something that they need to give more thought to,” Evans said.

“Currently some trustees meet four times a year for between three and five hours,” he added. “Ten hours a month, as recommended by the NAPF [National Association of Pension_Funds], is not unreasonable. With this kind of time commitment trustees could certainly make progress on issues such as governance.”

Have your say

You must sign in to make a comment

IPE QUEST

Your first step in manager selection...

IPE Quest is a manager search facility that connects institutional investors and asset managers.

  • DS-2487

    Closing date: 2018-11-22.

  • QN-2489

    Asset class: Alternatives.
    Asset region: Global.
    Size: $100m.
    Closing date: 2018-11-30.

  • QN-2491

    Asset class: Alternatives.
    Asset region: Global.
    Size: $20m.
    Closing date: 2018-11-30.

Begin Your Search Here