Pension scheme trustees have been the whipping boys (and girls) of the pensions industry for many years. Four years ago, FRC Chairman Sir Brian Nicholson was amongst those bemoaning their inadequacies, while more recently, Ros Altman was arguing in the Telegraph that "the complexity of investment means you have to question whether they are equipped for the task."
The Pensions Regulator’s new report raises similar concerns about whether trustees are fit for purpose. The report notes trustees must ensure they have the right skills and hire the right people to ensure their pension scheme is run smoothly, and reveals that fewer than half the 800 or so trustees surveyed by the regulator "felt ‘very confident’ about the internal controls put in place to avoid inappropriate investment strategies".
There are striking parallels here with a survey carried out back in 1998 by the then Department for Social Security (now DWP), which found that "most trustees came to the position with little or no direct relevant experience".
The picture which emerges is of a committed and well intentioned, if not particularly expert, group of people, faced with an increasingly complex task. A bit like a parish council or a board of school governors.
To the average pension scheme member, though, the "committed" and "well-intentioned" qualities probably provide enough reassurance to outweigh the lack of expertise. The alternative to the trustee model, after all, would be a contract-based pension, in which a third party – usually an insurance company – provides the employee with a pension arrangement as just another financial product (like an ISA or an insurance policy). And we all know what high esteem such service providers are held in.