A recent report says a more confident approach from trustees could result in real innovative thinking. Helen Morrissey is inclined to agree.
Recent years have been characterised by a real focus on improving scheme governance. To be fair we have seen a lot of success in this area with the introduction of charge caps and investment governance committees as well as improved investment strategies.
However, a paper written by the 300 Club shows that we still have some way to go. According to the paper the responsibility of ensuring schemes pay out member benefits long term can weigh trustee boards down. With less support from sponsoring employers and a fear of making mistakes many boards can lapse into micro-management and risk aversion.
Trustees fear standing out from the crowd with an idea that might go wrong and so are unlikely to say anything. As a result there is over reliance on advisers and a move to herd-like behaviour.
According to the paper the responsibility of ensuring schemes pay out member benefits long term can weigh trustee boards down. With less support from sponsoring employers and a fear of making mistakes many boards can lapse into micro-management and risk aversion.
According to the paper trustees should run their pension scheme as they would a business. Such an approach would increase trustee confidence and give more leeway for innovative thinking. This is likely to play into the hands of lay trustees who may have run departments and teams as part of their day jobs and have valuable skills to offer.
In a world currently hamstrung by regulation and bureaucracy, such an approach seems like a breath of fresh air and I hope we will see more schemes adopt such an approach.
According to one of the report's authors we aren't light years away from being able to adopt such an approach - we just need to take the time to step back and take a long-term view of what the scheme needs. I hope it is a leap that many schemes are willing and able to take.
Have your say: Should trustees be held accountable for the security of data and assets in the event of a cyber attack?
In this week's Pensions Buzz, we want to know if you agree that trustees be held accountable for the security of data and assets in the event of a cyber attack.
More than four in five employers oppose the implementation of multiple pensions dashboards and any that do not include state pensions, the Association of Consulting Actuaries (ACA) says.
Half of scheme representatives agree fiduciary duty hinders trustees in addressing climate change, finds XPS
Half of scheme representatives believe the current fiduciary duty of trustees hinders them in their ability to address climate change, according to a poll by XPS Pensions Group.
PMI president Lesley Alexander and the institute's immediate past-president Lesley Carline talk about the challenges of Covid-19 and the opportunities and challenges the industry faces in the future.
The Pensions Administration Standards Association (PASA) has announced global consultant Deloitte as its expert knowledge provider for data.