The UK pensions industry needs Barclays. It is a market that is full of doom and gloom. It is only fitting then that Barclays should win the IPE European Country Silver Award 2005. For this is a sterling example of how to move forward. The dynamism, enthusiasm and sheer determination the leading banking group has displayed in developing a hybrid defined benefit and defined contribution scheme that excludes nobody is a far cry from the bleating and moaning of many of its peers.
With its ‘afterwork’ concept rapidly but firmly entrenched, Barclays has wasted no time tackling the governance structure that will be needed to ensure its continued success. Barclays says it’s all part of its objectives to create a world-class pension system. Central to the revamp, as with the wider afterwork project that preceded it, is making sure everybody is included, even if they decide not to take part. How Barclays has proposed to achieve this looks fail-proof. It defines its policy as engaging all the pension scheme’s stakeholders to enable the bank to deliver what each and every one needs.
Reconstituting the pensions’ trustee and employer committees was key to the project. These would be complemented by a new elected committee comprising employees themselves. The new boards have been stripped down and reconstructed to reflect the equality for which the bank is striving in its pension system. Introducing a stronger sense of balance and depth of talent, the new committee will comprise three member-nominated trustees, three independents, one of whom will be chairman, and three alternate representatives for both the member-nominated and employer trustees.
The trustee board has been broken down into sub-committees, which Barclays believes gives the trustees the scope to focus on key strategic issues, as the law is expecting them to do. There are sub-committees for investments, operations, communication, and disputes. Barclays says each has its own strategic planning and reference points.
The employer committees now comprise the Barclays Pensions Governance Group (BPGG). It is made up of senior managers, including the group finance director as well as senior operations and human resources executives. As with the trustee board and based on its complexity, Barclays has created a sub-committee called the Tactical Advisory Group (TAG). This includes experts pulled from all over the group: asset management; operations; investment banking; accounting; treasury; risk management; and, of course, pensions management.
The new elected staff committee is called the Pension Fund Advisory Committee and its remit is to consult with the employers on pensions issues and take care of member-nominated trustee elections. Such is its success that the last time seats on the committee were up for grabs, 18,000 Barclays Group workers voted.
But the governance structure goes beyond setting up boards and committees. Barclays says it contributes directly to the wider issue of risk management, scheme funding and investment strategy. It claims decisions are now more comprehensive and more rapidly taken.

With the structure in place, Barclays wasted no time putting it work, with the TAG reviewing the pension plans included in afterwork and assessing their investment risks based on demographics, regulatory requirements, covenants and major setbacks and their effect on the fund’s balance sheets, profit and loss accounts, and liquidity. This has led to Barclays having a clear picture of how much risk it can permit itself in support of the plans’ assets, which have recently received an injection of cash from the bank.
With the trustees’ consent, Barclays was in a position to set the risk parameters and funding level in April 2005. This has led to a more diversified investment strategy, which takes account for risk adjustments and improved asset- liability matching. This essentially matches equities and alternatives such as commodities, hedge funds, private equity and property against fixed income. The initial result has seen Barclays’ pension system report a 10% reduction in its value at risk and an improvement from 35% to 37% in its information ratio.
With the strategy in place, letting its employees know about the pensions on offer was the next step. Barclays says the financial security of scheme members is paramount. It wants its employees to feel confident and knowledgeable about their savings options and to participate fully in the system. Barclays is keen each employee and member makes the right choice – even if that means opting out.
That just leaves communication. It launched its award-winning new-look benefits statement in 2004, which signalled a communications overhaul designed to maximise access to key information for each member. It ensures members can identify when to increase their contributions to fill potential gaps and includes detailed information about their state pensions.
The result? The number of employees directly contributing to their pensions has increased by 70%, with average contributions rates rising from 3.5% to 5% of salary.