David Weeks, co-chair of the Association of Member Nominated Trustees, sets out his four guiding principles for 21st-century trusteeship

The Pensions Regulator is presently consulting about “21st century trusteeship and governance”. I set out here four ideas for guiding principles:


1) Give attention to the balance of powers on the boards of pension schemes

This is a topic that figures in the Regulator’s own Trustee Toolkit. It does not, however, receive much mention in their current discussion paper. I see a pension scheme as a triangle.

The three sides are: (1) the sponsoring employer, who contributes financially; (2) the professionals and managers, who provide service and expertise, for which they receive remuneration. Then there are (3) the scheme members, who make contributions, and whose future livelihood is at stake.

I believe that it is important for all three sides of the triangle to keep in balance. Member-nominated trustees, as the name spells out, represent the members. That task is needed because some commentators see the members as amateurs who should simply do what the experts tell them. I think that key measures that members need to keep under watch are: (1) the strength of the employer covenant; and (2) the robustness of the risk management plans.

 2) Encourage trustees to join a support network, and to get trained

The Association of Member Nominated Trustees (AMNT) has over 650 members, in 450 schemes of all sizes. Together, we represent schemes with over £600 billion of assets under management. That is around one third of all UK occupational pension scheme funds. We provide an opportunity for trustees to compare their experiences with others. They provide a context to see how other schemes tackle the same issues. AMNT members look out training in five main areas: (1) investment; (2) governance; (3) communicating with scheme members; (4) administration; and (5) “board dynamics”: how decisions are made.

3) Give consideration to pay lay trustees

Third, give consideration to paying all lay trustees. The Regulator’s consultation paper says: “their role is becoming increasingly challenging in the face of fast paced changes and growing complexity”.

Currently, around one third of AMNT members say that they receive payment for their duties; two thirds say that they do not. On average, they spend 25 days a year on their duties. That matches the time commitment that is expected of a non executive director of an NHS trust.

The daily rate should be the same: say £300. The numbers who are eligible could be filtered by cutting out schemes that are too small, and individuals who have not passed the Regulator’s Trustee Toolkit. The Regulator’s discussion paper says: “We are also keen to consider what steps could be taken in cases where trustees cannot or will not meet expected standards”. I say let us have some carrot as well as some stick.

 4) Ensure that pension scheme members are well informed.

Longer term, the best way to ensure well governed pension schemes is to ensure well informed pension scheme members.

The new regime of pension freedoms is a starting point. Regulator and trustees together should hot up the pace.

A generation ago over one million new home owners invested in the Right to Buy. They became interested in the costs of property management. So, today, we must encourage our pension scheme members to increase the cash sums that they pay into their pension pots. In return for that, scheme members will rightly expect governance that is both cost effective and transparent.

In conclusion, I urge The Pensions Regulator to adopt these four guiding principles. They are both positive and practical. They would provide a focus for the current consultation exercise.

David Weeks is co-chair of the Association of Member Nominated Trustees