UK - Trustees are getting more skilled and educated, an Oxford University professor said at the annual conference of the National Association of Pension Funds.
In a session named: “After Myners: trustee expertise and competence” professor Gordon Clark said very little is still known about trustees and the lack of knowledge had resulted in people making “assumptions, good or bad”.
Clark, professor John Marshall and PhD student Emiko Wakasugi are researching the dynamics of trustee decision-making.
With the project due to finish by September 2005, the researchers will analyse the process from the cognitive and psychological as well as financial point of view.
“One of the assumptions is that trustees are completely ignorant and unskilled. But that’s wrong,” Clark told IPE.
“We have been collecting questionnaires on trustees coming for training and it is pretty apparent that there is a change going on in the trustee community towards more and more educated, more and more skilled trustees,” Clark said.
In his presentation, Clark argued that the Pension Bill of 2004 is aimed at encouraging greater competence but it is vague on what qualifies as competence or expertise.
Professor Marshall focused on the cognitive aspect of the decision making process.
Making a decision, he said, comes through a difficult process and trustees are also exposed to unstable conditions, making their decision-making more onerous.
“We must struggle against the cognitive blinkers and illusions that we have inherited” he said.
“It is all very well to have some kind of training programme and tell people what to do but then everything changes in the economic world”, Professor Marshall said.
The Pension Bill, he said, demands that trustees be “conversant with “and” have knowledge of” the financial world, but nothing is said as to how they should make a decision.
The upshot of the research could be of use for the government’s policy makers on the issue of a Trustee Code of Practice and the NAPF on the trustee community, Clark also said.