The importance of the role of trustees in UK defined benefit (DB) pension funds was highlighted in 2007: the Local Authority Pension Fund Forum (LAPFF) in particular encouraged trustees to engage with companies over merger and acquisition activity.
The potential for trustees to scupper M&A activity in order to protect the company's pension fund was highlighted by their involvement in the Sainsburys, telent and Boots acquisitions.
Marcus Whitehead, partner at Barnett Waddingham, said the burden on trustees had increased as it had been made clearer what exactly their responsibilities really were.
"On the face of it, being a trustee looks a lot more daunting now," said Whitehead.
However, he noted trustees now had some great supportive literature produced by the UK Pensions Regulator.
"If you are a diligent, responsible trustee, there is a lot more help, so you are not dependent on your advisers, you can do your research [and] be clear on what the responsibilities are on you," he said.
John Broome Saunders, actuarial director at BDO Stoy Hayward, said trustees now had to behave like corporate creditors and in most cases they were not used to doing so.
He stated trustees had to understand what was going on with the sponsoring company, as this had become a key consideration.
"I think it's only a matter of time before a really juicy case comes to court where it becomes very obvious that you just can't come to robust decisions where you have trustees with conflicts of interest because of their company role," warned Broome Saunders.
David McCourt, policy adviser: investment and governance at the UK's National Association of Pension Funds (NAPF), said the trustees' job had got more onerous, but noted there was recognition from people when they took the role that they realised this was the case. He put the increase in the difficulty of the role down to the existence of more rules, broader types of investment, and a greater emphasis on funding levels and employer covenants.
"Trustees do need to devote a lot of time and preparation to doing their job properly, but it can be done if their employer gives them support and time for training," he said.
McCourt said it was also the job of consultants, secretariats and national bodies to keep information and advice fresh to make sure trustees could understand the technical side of investment decisions.
He added: "The Pensions Regulator is very keen on this and has the trustee toolkit on its website. The Regulator is keen the trustees should be able to grasp the key areas they are making decisions on.
"It's an onerous job that people get a lot of reward out of because they are making a contribution," he concluded.
John Hastings, a partner at consultancy firm Hymans Robertson, said one of the problems of being a trustee was the amount of regulation they had to keep on top of.
"With the best will in the world these people are being asked to take on a lot.
"If the government thinks the only way to encourage trustees is to bring in more and more regulation and encourage them to sit exams, it will not improve decision making, it will make them risk adverse."
Rising to the challenge
However, while John Belgrove, senior investment consultant at Hewitt, acknowledged a trustee's job had got harder, he said he believed trustees were managing it well.
"The pensions world is more complex and the choices trustees face have never been more expansive.
"It is a very difficult job and I find that trustees are stepping up to the plate and putting more effort in, meeting more frequently and for longer, and a greater set of solutions are being implemented that are more appropriate for the pension funds," said Belgrove.
Lynda Whitney, a pensions consultant at Hewitt, echoed this view and said trustees had risen to the challenge.
"For example, one issue is how do member-nominated trustees contribute to the board? They do because they have a member perspective [and] they know what's important - although they are amateurs they are useful part of the mix," said Whitney.
Keating of Brighton Rock has been a trustee for a pension fund. Speaking from experience, he said common sense got you a long way in most matters in finance.
Keating said he saw the future of the trustee system as bright and trustees as being able to cope with any challenge thrown at them.
"I think the trustee system is a very sound one - I think trustees as a class, are much maligned.
"Everybody tells me trustees are a bunch of morons, but don't you believe it."
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