Rory Murphy
For all the challenges UK pension funds have faced in the last 30 years or more, we shouldn’t lose sight of the fact that workplace pensions have been a great welfare success story.
Average pensioner incomes, excluding housing costs, have doubled in real terms since 1994 - an achievement largely attributable to workplace pensions and the work of trustee boards.
But times have changed, and the generous defined benefit (DB) schemes that have delivered much of this growth in retirement incomes are no longer sustainable for most employers.
In moving away from the DB model, however, pension funds shouldn't be simultaneously looking to jettison valued contributions to their members' wider welfare, financial or otherwise.
I have long argued that as pension trustees, far from reducing our engagement with scheme members, we could and should be expanding the help and support we can provide to our members and their families.
Pension trustees are in a unique position to provide such support - particularly in times of rapidly rising living costs and, for many, financial hardship.
Unlike commercial businesses, we have a direct and mutually constructive relationship with our "customers" - the scheme members. In return for their, and their employers', contributions, we provide valued benefits on a not-for-profit basis, under a well-regulated system, and we do so without having to cater to the interests of shareholders.
Collectively, we have successfully and efficiently delivered retirement benefits for millions of households. And I have no doubt we will continue to do so.
My question is - why aren't we doing more?
The Merchant Navy Officers Pension Fund (MNOPF), for example, worked during the pandemic with Wellbeing People to provide our members with a programme of online sessions providing advice and support on a range of issues, from financial planning to mental and physical health. The response from our members was hugely positive, and we have further sessions planned for later this year, reflecting the issues we know many of our members are facing.
Why, as pension funds, are we not exploring other forms of financial support and advice, particularly given the possibilities opened up by developments in technology?
Social enterprise group, Hi55, as an example, provides a digital payroll scheme that enables employees to access what is rightfully theirs, as and when they need it and at no cost to them - rather than having to wait for their salary to be paid at the end of the month. Is this something that could benefit people in receipt of pensions?
Why don't pension funds, individually or collectively, use their financial clout to negotiate favourable deals to make available to their members on other products or services, such as home or car insurance, or even funeral plans?
Pension fund trustees' first priority must always be, of course, to deliver on the promise made by the employer and to secure their accrued benefits.
But that doesn't preclude offering other benefits. As not-for-profit, member-focussed organisations, with significant financial resources, we are uniquely well-placed to do so. Many of us cry out for innovation but often seem to be reluctant to be innovators ourselves.
Pensions have a future which will look different from their past. But that doesn't have to be a picture of diminishing influence or managed decline.
Instead, we have an opportunity to determine what that future looks like, to build on the strengths and achievements that characterise our past, and develop new ways of delivering valued benefits to our members and their families.
Rory Murphy is chair of trustees at the MNOPF
