UK – The National Association of Pension Funds (NAPF) has called for the introduction of a voluntary code of pensions scheme governance to avoid what I called a ‘governance vacuum’ resulting from the shift from defined-benefit (DB) to defined contribution (DC) pension deals.

In a consultation paper, “Pension Scheme Governance – fit for the 21st century?” the NAPF warned that millions of workers could be effected by poorly run and governed schemes.

The NAPF, which includes pension scheme worth a total of £700bn (€1.01tn) has argued that a governance code would provide the scope “to cut away much of the regulatory burden currently placed on pension trustees.”

“With assets topping £700bn, and touching the lives of some 20m Britons, good governance for all the UK’s pension schemes is just too important to ignore,” said NAPF director of policy Joanne Segars.

A new code was needed to tackle a “governance vacuum” created by the rapid development DC schemes with no “effective mechanism” to represent the collective interests of workers after the point of sale, the NAPF said.

It would improve trustee effectiveness, which the NAPF said was essential for an improved governance system to work well. “Trusteeship today requires significant expertise, yet many have identified trustees as being the weak link in the value chain,” the NAPF said.

The association has also suggested that small schemes get together under a multi-employer scheme arrangement with an overarching governance structure.

“If the government’s plans for pensions reform involve a significant role for workplace pension provision, there should also be a policy framework that encourages effective governance of such schemes,” Degars said.

The consultation paper and the Draft Code of Governance for Pension Scheme Trust Boards and Management Committees are available on the NAPF’s website at www.napf.co.uk and feedback to the consultation is expected by October 3.




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