Jonathan Stapleton speaks to Independent Trustee Services’ (ITS) Chris Martin and Ian Pittaway about 30 years of change in the industry, how the pandemic has impacted the industry and the future of pensions.
Every business in the country has been disrupted as a result of the pandemic. For ITS one of the smaller challenges Covid-19 posed was the postponement of its 30th anniversary celebrations, which were due in 2021 but pushed back until this year.
In an exclusive interview with Professional Pensions, ITS executive chair Chris Martin reminisces over the past three decades - saying little has remained unchanged over the period.
He explains: "When we were preparing for our 30th birthday, I reflected on the first couple of schemes the firm ever dealt with. The big issue that was troubling us on those schemes was how to distribute surpluses.
"The world has moved on a little bit since then and we have gone through the full cycle of regulatory, legislative and economic change, which has driven many schemes from having the challenge of how to distribute too many assets to the challenge of not having enough assets to pay members benefits."
Martin says the other major change he has seen, particularly over the past few years, is the way in which trustee boards organise themselves and how boards actually think.
He says: "There's no coincidence that over the last five to seven years, the emergence of professional trustees and corporate professional trustees in particular, have helped to drive change.
"The most satisfying thing, I think, is that most trustee boards we're involved with now think strategically about what they're trying to deliver for their members and their other stakeholders."
Martin adds: "30 years ago, you went from one meeting to the next and sort of worked out what happened in between. Now, it's very much about planning for where we want to get to, understanding what the building blocks are and how we deliver it. And frankly, when we were running multi-billion-pound entities, that's exactly how we should be thinking."
ITS trustee director Ian Pittaway says one of the constants in pensions has been member outcomes but notes the framework has changed.
He explains: "When I started in pensions, it was about open defined benefit schemes… As we all know, that has changed and the frontline is now good defined contribution provision - and those schemes are trying to help people make better contribution decisions, better investment decisions and better decumulation decisions.
"That is where the action is now - focussing on the same member outcomes but in a different environment."
The pandemic changed a lot for pension schemes - with many trustee boards overhauling the way in which they work.
Martin thinks the pandemic may have sped up a trend towards professionalism that had already been underway - with many schemes either shifting to a sole trusteeship model or overhauling their governance.
"The professional corporate sole trustee model is being adopted by a number of schemes, particularly those that are in the end phase of their existence, where they're moving towards risk transfer, consolidation or some other outcome. The sole trustee model can perhaps deliver those decisions and implement them a little bit more quickly and I think the pandemic made people realise that a more dynamic structure could be more successful."
Martin says that for those schemes that aren't moving towards the sole trustee model, the pandemic has created a governance framework "a bit more fit for 2022".
"I think the pandemic has forced trustees and advisors to change the way they work to be a little bit more dynamic, and not to let the setting up of an in-person meeting delay an important decision… now, there's no real excuse for that."
He adds: "Hopefully, it means we'll all be a bit more dynamic, implement things a bit more quickly, and deliver better outcomes."
Pittaway thinks the pandemic has also made trustees much more aware of the risks they face - moving not just pandemic risk but all risks "centre stage".
He said: "Risk is no longer the Cinderella subject - it is what pension schemes are about and how trustees can manage that."
Matin says the pandemic has also had a positive effect on the way sponsors and trustees have work together - moving the two sides away from "stage-managed positioning" towards a much closer, more open relationship.
He says: "Some of the relationships formed during the pandemic will be enduring and actually will be much better for it - helping deliver better member outcomes."