UK – Christine Farnish, the chief executive of the National Association of Pension Funds, has acknowledged that a “new legal form” of the trustee system may be needed – as part of “fresh thinking” needed in the industry.
She said a “more fundamental analysis of the system of pension scheme governance may now be needed”.
Farnish pointed to a review group that the NAPF has set up to examine a “range of possible governance models” to oversee funded occupational pensions. That group will release its recommendations next spring.
Writing in a newspaper article, the NAPF CEO said it may be that the trustee system is still the 'least worst' option. But she said: “Or it may be that a new legal form is required.” Farnish’s comments are the latest salvo from high-profile figures in the industry which appear to question the trustee system.
Farnish said that the UK pension system has a “crying need” for a cost-effective means of workplace pensions – and that no one is today setting up trust-based schemes from scratch.
“We need fresh thinking if our children are to be able to benefit from reliable opportunities to save for retirement,” Farnish said. “Part of that thinking ought to be about how collective workplace funds should best be governed.”
Farnish said there is “schizophrenia” in the government’s thinking on pensions – with the Department of Work and Pensions wanting more lay people as trustees, while the Treasury wants more trustee competence.
But she added: “Nowhere does the government appear to be challenging the fundamental legal model for running pension schemes, nor thinking laterally about how lessons from the debate on corporate governance in listed companies could be translated across to the governance of multimillion pound pension schemes.” No one at the DWP was available for comment.