UK - Atkin Trustees, a UK-based independent trustee firm, is moving into the area of fiduciary management for small pension schemes with the launch of its Scheme Management Outsourcing (SMO) offering.
Richard Bryant, head of trustee services at Atkin Trustees, said the proposition would allow the firm to take on "all the normal responsibilities of the trustee of a pension scheme, including scheme governance, investment strategy review, covenant review and advisor selection".
In addition, while the employer and member representatives can be involved in high-level strategy discussions and would receive regular reports from Atkin Trustees, they would not be classed as trustees. Therefore they "would not have the responsibilities or requirements, such as trustee knowledge and understanding, associated with the role of trustee".
Currently the firm has trialled the model with one client, a small private sector DB scheme with liabilities of around £30m (€34.5m), over the last year. In that time it claimed the scheme has reduced costs from an average of more than £200,000 a year to approximately £80,000 and at the same time made governance processes more efficient.
In the UK more and more firms are becoming interested in the fiduciary management space, where trustees hand over the investment decision making and monitoring to some form of fiduciary manager or implemented consultant, however the trustees still have the overall responsibility.
Bryant said while the SMO service is a form of fiduciary management this is "not in the traditional sense of the words where this relates to investment only. We see SMO as being fiduciary management in a wider sense - where we are responsible for the day-to-day management of the scheme as whole".
But he highlighted the firm would not take decisions based only on its own views and would take independent advice where appropriate - for example on investment, actuarial or legal issues.
Bryant added the advantage with Atkin Trustees is they have previous experience to be able to liaise with advisors more effectively and present the employer and member representatives with a 'big picture' of advice and recommendations, while also being able to take decisions quickly and effectively within the overall strategy.
That said, the trustee firm believes the SMO model will work best for smaller schemes with up to £200m of assets, in particular those where existing trustee boards are struggling with the resources to carry out their role, or where cost and efficiency are significant issues.
Currently Atkin Trustees has more than 90 pension scheme clients, but has steadily recruiting staff through the recession so it believes it has the capacity, experience, systems and procedures required to manage further pension schemes, but acknowledged it may have to continue to hire staff if demand for the SMO model requires the firm to expand further.
Bryant added: "The needs of the small scheme are the same as those of large schemes but they don't have the same resources. We have recognised that gap in the market and this model aims to relieve those pressures and create a healthy fund for the company and the members."
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