17th July, 2019
A few people have asked me what the future is for lay trustees following the consultation document published by the Pensions Regulator. However, I believe there remains a role for engaged lay trustees and that they add value to the running of the pension scheme.
I wonder whether we are at risk of finding suitable candidates both from the employer and the membership. There are many schemes out there, often closed to future accrual who find it particularly difficult to appoint member nominated trustees as they just don’t get the level of interest from members. I was heartened to hear of a scheme recently that had a large number of applications for a vacancy – clearly that scheme is doing something right in terms of member engagement and communication to get so many applicants. But I suspect this is the exception rather than the norm. The other issue is finding candidates who compliment the skills of the current trustee board and will be engaged.
I have seen evidence of less engaged trustees. Trustees who do not complete their TKU and who don’t appear to take seriously the role of a trustee even though they are managing millions, sometimes billions, of pounds of retirement savings. Trustees who turn up to trustee meetings having not read the meeting papers and sometimes claiming to have not even received them! I have attended meetings where a number of trustees have never spoken and I even saw one fall asleep! What are these trustees adding to the meeting? I understand that some trustees particularly MNTs may lack the confidence to speak out but a good chair should be able to make sure they are given the time to speak and to make the trustee meeting a safe place where you are not judged for asking what you fear is a stupid question – trust me if you don’t know it, then there is a good chance that other people around the table don’t know it either!
Given this, I have some sympathy with the Pensions Regulator and the stance they are taking in their latest consultation document. We do not need lay trustees who are disengaged and add nothing to the running of the scheme and appear to just be there to eat lunch and be entertained. I am always amazed when agendas seem to be padded out so that the meeting stretches to cover lunch. Conversely, I have seen trustees (generally employer appointed) who are so busy that they don’t have enough time in their diary to stay for the full meeting. Whilst it is very important to have employer representation on the trustee board, I would argue that someone who cannot stay for a three hour meeting put in their diary six months earlier is probably not the best person to be the employer nominated trustee. They could still attend if it is felt vital, but in an employer observer capacity.
However, I have worked with some excellent lay trustees, both employer nominated and member nominated who have taken the time to understand pensions and regularly attend further training to keep themselves abreast of developments in the pensions market. They are able to provide an insight into the company and membership, which as an independent trustee we just wouldn’t have. They are able to ensure that we get engagement from the right people at the company so that decision making can be effective and timely. Even where they are retired and no longer working for the business they often keep in touch with existing employees who have their ear to the ground for corporate restructuring, client losses and other issues that may impact covenant. We must make sure that whatever requirements are put in place for lay trustees following the outcome of the consultation, we do not put off those good lay trustees. They should be encouraged and their input valued and as an industry we should help them.