UK – Pension scheme members are showing more interest in becoming trustees – despite regulation putting more responsibility on them, says a pensions lawyer at Hammonds.
“Because pensions are now more in the press than ever before, more members are keen on becoming part of the governance of a pension scheme,” Laura Millington told IPE on the sidelines of a briefing organised by Aon Consulting.
“So there are a lot of people who want to become member-nominated trustees. They want to know what has been going on and they want to know what it will mean for them,” Millington explained.
She said she had not noticed a loss of interest in trustee positions with the implementation in April by the Pensions Act 2004.
“I do not think it is an exodus situation. Trustees that are in place at the moment will get to grips with legislation and there will still be people who want to be trustees because they have an interest in the scheme.”
But trustees are “confused” about their new powers and the most effective ways to exercise them, said Paul McGlone, an Aon actuary.
McGlone said trustees’ profile has risen with new legislation but they must juggle new rules and responsibilities they have not faced before. These include reporting “notifiable events” to the Pensions Regulator and behaving as large unsecured creditors.
Additionally, they are to meet their ‘whistle-blowing’ obligations – which also extends to lawyers, advisers and people generally associated with pension funds.
Trustees will have a say about changes to their company and raise objections but he pointed out that the knowledge to critically interpret data disclosed by the company and evaluate external advice is scarce. “Right now very few trustees can do that,” he said.
The issue of timing will also influence the new trustee, who will be called on quickly making decisions on company changes and sometimes at a short notice.
And because a new trustee’s role is so critical to the health of the pension scheme and the company, executives who also sit in trustees board must awake to the issue of potential conflict of interest and get legal and actuarial advice, Millington observed.
The Pension Regulator, which is at the heart of the new pensions framework, has behaved proactively and energetically in the first two months of its existence to show trustees the new path, Hammonds solicitor Fraser Spark said.
The regulator will need to show trustees who are frightened by their new powers how to use those powers.