Building on Excellence

The Occupational Pensions Defence Union celebrated its 10th anniversary last year – but the risks trustees now face are greater than ever.

And the mutual insurance scheme – that protects trustees running occupational pension schemes – is responding to change as it matures.

Peter Murray took over as chairman of OPDU’s advisory council last month from Alan Herbert, who had chaired the body since its launch in 1997.

Murray says he wants to build on the “excellent” work that has been carried out in constantly monitoring the risks to which trustees are exposed and making sure OPDU’s insurance covers them – as well as continuing to feed ideas for new complementary products to the executive.

Murray is also concerned that trustees, brokers and sponsoring employers understand how OPDU differs from other insurers in the marketplace.

He says: “There is a slight tendency on the part of some insurance brokers and some company insurance departments to view all trustee insurance policies as the same and just buy the cheapest one. Unless you do your homework you may buy a policy which is actually not much use to you.”

Murray also says the advisory board needs to make sure new risks are included in the policy. He says there have been massive changes since OPDU’s launch.

Murray explains: “Ten years ago you were at small risk of getting into dispute with your members – now you have the regulator and the ombudsman; and you are seeing potential conflicts arising between trustees and the sponsor, which you would not have had 10 years ago.

“It is necessary to monitor these and other economic changes to make sure OPDU’s policy covers these issues.”

He adds: “If you are going to ask trustees to do an increasingly demanding job then one of the things you need to do is to ensure they are properly protected because things do go wrong.”

Murray is a trustee of the Railways Pensions Trustee Company, OPDU’s largest member, and was its chief executive until his retirement. He was chairman of the National Association of Pension Funds between 1997 and 1999 and vice-president of the trade body from 1999 to 2001.

OPDU was launched in 1997 to coincide with the implementation of the main provisions of the Pensions Act 1995.

Yet, the idea of launching a sort of mutual insurance scheme to protect trustees running occupational pension schemes had been mooted by a group of pensions managers and lawyers as early as 1995.

By 1996 they had approached Thomas Miller – an insurance firm specialising in risk management and specialist insurance services, including a compulsory scheme providing professional indemnity insurance for all barristers in England and Wales – to explore establishing a defence union for the pensions industry.

At the same time the National Association of Pension Funds had facilitated a meeting of representatives from a wide range of pension schemes and a steering committee was set up under the chairmanship of Herbert – and including a range of industry figures including Sainsbury’s head of pensions Geof Pearson and pensions lawyer Robin Ellison – to work with Thomas Miller to design OPDU.

OPDU’s advisory council was set up to represent the interests of the insured members and to work with Thomas Miller to ensure OPDU was as proactive as possible to meet the needs of its membership and help raise standards.