Thursday, 21 June 2018

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    People powered pensions

    Getting the right people in place, rather than monitoring processes, will raise governance standards argues the PLSA

    The Pensions and Lifetime Savings Association (PLSA) has issued a new discussion paper, setting out its definition of good governance for pension schemes and its ideas for achieving it.

    Good Governance – how to get there: A PLSA discussion paper outlines core characteristics of effective trustee boards and governance committees. These include collective knowledge of technical areas related to running the scheme such as investment and actuarial matters; communication skills and commercial acumen; cognitive diversity, and access to executive support for the day-to-day running of the scheme.

    The paper also examines the role of the Pensions Regulator (TPR) in scheme governance. At present, it argues, TPR’s approach is focused on scheme processes, rather than the people carrying them out. Instead, it says that TPR’s emphasis should be on ensuring that individuals on boards have the right experience and knowledge, as outlined in the paper.

    Although trustees of pension funds are often responsible for assets equivalent in value to those of a sizeable company, scheme governance is given little scrutiny compared to that in a corporate regime. Joe Dabrowski, head of governance and investment at the PLSA said: “Pension schemes are affected by the fortunes of their sponsors and the wide economy, so cannot guarantee success, but governance bodies that are expert, effective and diverse given them the best possible chance of success.”

    The full paper is available from the PLSA’s website

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