Ian Pittaway talks regulating professional trustees, avoiding conflicts and the budget aftermath
Before I meet Ian Pittaway, I read the testimonials on the website of his law firm, Sacker & Partners LLP. Probably the description that best captures him is Chambers UK’s “very measured and authoritative”. The Legal 500 reckons he “goes for the jugular”, but he seems a bit too civilised for that in person. Perhaps he was on his best behaviour.
When we sit down in Sackers’ office near the Barbican in London, Pittaway has just been appointed chairman of the Association of Professional Pension Trustees (APPT). It’s a new strand to an already busy portfolio career, as he is Sackers’ senior partner.
He is also an independent trustee, which came about because of an entrepreneurial streak.
Lives: St Albans
Educated: Robert Clack Comprehensive School Dagenham, University of Hull, Chester College of Law
First job: Supermarket shelf stacker
Current role: The Senior Partner of Sackers / Chair of APPT
Past roles: Chair and secretary of APL
Recreation: Wine, football and forestry
Family: One son about to start naval officer training
“In 1996, the government said that when a scheme went under, there needed to be an independent trustee appointed. So I went out and bought Independent Trustee Limited,” he explains. He’s been an independent trustee ever since, part of a small team that consists of lawyers from Sackers.
“It wouldn’t be good form if someone were appointed as an independent trustee and then brought in their mates from their law firm”
How easy is it for Pittaway and his colleagues to avoid conflicts of interest? A strict separation of clients is necessary. “It wouldn’t be good form if someone were appointed as an independent trustee and then brought in their mates from their law firm. It wouldn’t work or be appropriate,” he explains.
As an independent trustee, he is often advised by other law firms. “I don’t know if it’s daunting for them to be advising another lawyer.”
What does he want to achieve as chairman of the APPT? Independent trusteeship is an “unusual set-up”, he says. “It is an unregulated business and that’s perhaps surprising, because actuaries in the pensions business and lawyers, independent financial advisers, accountants – everybody else is regulated by their professional body. It’s possible to stick a plate outside that says ‘Independent Trustee’.”
“The Pensions Management Institute is quite keen on a qualification for professional trustees: we are too”
He continues: “Government itself doesn’t seem inclined to regulate. So that’s where the APPT is trying to encourage self-regulating and self-policing… But it’s going to be difficult on a voluntary basis to control everyone. The Pensions Management Institute is quite keen on a qualification for professional trustees: we are too.”
Catalyst for change
Pittaway is very clear about the qualities that effective independent trustees need to possess. “You’re looking to change things and that will only come from you. It won’t come from third party administrators, the secretary or the other trustees. You’ve got to be the catalyst.”
“You’ve got to be the catalyst”
An effective trustee board “finds time to plan and resource things properly,” he says. “It’s important that a good professional chair takes people away from the slavery of the day-to-day agenda and actually says ‘Hang on… we know we need to approve the accounts, or issue that piece of communications, but what do we want to achieve? What is this trustee board trying to achieve this year, next year?’”
One challenge is what happens when defined benefit schemes close to new members. “If you were in a school that was closing and there would be no new pupils coming in, in the first year it wouldn’t make much difference. By the time you only had the GCSE and A-level people, it would be different.”
When schemes have no members who currently work for the company, they will feel like “millstones” for employers, Pittaway predicts.
“It’s important that a good professional chair takes people away from the slavery of the day-to-day agenda”
“One of the main jobs of a professional trustee is to keep that relationship with the employer, to minimise that polarisation… because when you come to the employer to ask for more money, or more support, they’re not interested in its history. That’s a big job,” he says.
In the aftermath of this year’s Budget, life is no less complicated for defined contribution schemes. Pittaway says that despite their best intentions, for many trustee boards DC was a “Cinderella subject” until the Budget proved a catalyst. Now, reviewing their scheme’s investment options and making sure it complies with the new rules is going to be a big responsibility for trustee chairs.
Pittaway doesn’t expect a mass of DB scheme members will rush to transfer their money into DC. “If you’re a member of the HSBC pension scheme, or Standard Chartered, or Lloyds, and you’ve a steady income… you’d say: ‘I could cash that in, but I’d have to pay a lot of tax and am I going to replicate the income I’m going to get from the employer I’ve just spent the last 20-30 years with?’
“There’ll be people who go off on a world trip – do I think the average person is going to cash in? No.”