“They deliver above expectation when the scheme has a particular challenge.”
“I found the trustee training really beneficial, highly recommended. I am not a trustee, I represent the employer and I think it will be valuable for me in future, having a better understanding of the trustees' perspective.”
“PSGS were overall more professional than others.”
“The Trustee Training course is very good. Excellent coverage of material presented in an easy-to-digest manner and quality of presentation by both presenters. ”
“Ann and her team are very knowledgeable and proactive, liaise well with our other advisers and provide the Trustees with an invaluable secretarial service.”
“In my experience, not all professional trustees are able to cope with tricky or potentially confrontational situations. I find PSGS has massive experience in getting involved, earning the respect of others and resolving such issues. They get stuck in – they are a first rate team.”
Maybe it is just that an analytical mind is useful when you work in pensions and categorising things helps us, but I’ve always thought it's interesting how we label pension schemes according to size. Is a ‘big’ scheme really all that different to a ‘small’ one?
The recent Big Schemes survey by Barnett Waddingham was an interesting read. Looking at the issues highlighted – healthier funding positions, the need to think strategically about deficit contributions, increasing transfers-out, long term endgame planning… - made me wonder about the scheme secretary’s view of large (assets over £1bn) defined benefit (DB) pension funds.
So, in a much less statistically significant survey than Barnett Waddingham’s, I asked some of the outsourced scheme secretary team here three questions:1. What particular challenges do you think trustees of large schemes are facing?
One consistent challenge is the greater governance burden – trustee boards of big pension schemes are expected to set best practice standards due to the size and resources they have. For example, industry wide issues like GMP equalisation are expected to be battled by the larger schemes first, with smaller schemes following their lead (at usually much reduced cost and effort). Ensuring regulation changes are implemented in a large scheme can be a very big task at great expense.
Other challenges vary significantly with how well funded the pension scheme is and how strong the sponsor’s covenant is. Generally, you’d expect large schemes to be well funded (the Barnett Waddingham survey highlighted average accounting funding levels had reached 100% for the first time) with a reasonable covenant. Here, scheme secretaries are helping trustee boards focus on 21st century trusteeship and looking at issues such as individual trustee and collective board effectiveness.
There are, of course, a few exceptions to this rule (need I mention Arcadia?). In these cases, the Pensions Regulator (tPR) is heavily involved and keeping the pension trustees and their scheme secretaries on their toes!
Through its recent statement, tPR’s encouraging all pension trustees to discuss with sponsors long term objectives with a view to reaching self-sufficiency in the not too distant future. This could involve buy-ins as part of the de-risking process, but cashflow investing is also a big challenge as schemes become more mature and need to generate cash to pay benefits.2. What is keeping you busy with these schemes?
Definitely de-risking. For a pension scheme secretary this means lots of project management. Currently, our team are working on pension increase exchange (PIE), flexible retirement option, enhanced transfer value and other projects typically driven by the sponsor’s advisers.
GMP rectification - and now equalisation – is on everyone’s list, but our scheme secretaries are also busy on projects such as removing defined contribution (DC) sections and AVCs from within trusts, journey planning and looking to clean up data so, as pension schemes approach more favourable funding positions, they are ready to consider buy ins/buy outs.
Then there are more scheme-specific issues we’re dealing with: transitioning to electronic member communications, implementing an internal audit function and dealing with member complaints. Think of the scale – there is the potential for literally thousands of members to go through the internal dispute resolution process (IDRP), should something happen.3. What – if anything – is different about being a secretary to a large scheme?
General consensus from my quick poll was ‘not too much different, just the scale’. Scheme secretaries typically get involved in more tasks than on smaller clients and still tend to deal with the sponsor’s in-house specialist pensions team (but that isn’t universally the case nowadays).
With larger pension schemes, the scheme secretary does get involved with more technical pieces of work. For example, investment strategies tend to be much more complicated and can include direct property, a global custodian and some very tight reporting deadlines. An investment strategy review can involve a huge amount of work arranging for transaction papers to be signed by the pension trustees etc. We also tend to be more involved in setting and managing scheme budgets, monitoring adviser budgets and approving invoices.
A trustee secretary’s role is so interesting and varied and the key differences with large pension schemes seems to be scale, quantity of projects and the fact you need to lead the way. Central to the role - whether the scheme is big or small - is making sure everything happens as it should, efficiently, effectively and without any drama.
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