August 2007

Planning Ahead: Pensions Governance in 2012

‘Pensions Governance’ seems to be the buzzword of the moment; Schemes are rapidly changing the way they operate, looking to the future and planning for what might happen.

Over the last 3 years, the pensions landscape has changed dramatically and with pensions now firmly in the mainstream media spotlight, this rapid pace of change seems set to continue.

In addition, there is now a focus on continuously increasing standards of governance and putting in place systems and mechanisms which can help achieve these standards of governance.

Much of this involves additional responsibilities and activities which might not have been carried out before, including:

• Extensive training
• Comprehensive and continuous risk reviews
• Additional monitoring of key activities
• Better informed decision making

Whilst placing a burden on Trustees this also greatly increases the red tape that schemes have to cut through.

There is also another side to this; Systems are being created throughout the industry to make these additional requirements less burdensome and in some cases easier to implement than the “old” practices.  This applies equally to the Pensions Manager whose workload has increased, and to the trustee who now has to achieve more, with a limited amount of time to devote to a typically part time role.

Pensions Governance in 2012 Seminar

It can be hard to implement change when we are unsure as to what the next five years will bring.  Rather than focusing purely on the here and now we need to enable people to plan for the future; therefore it is important that a debate is opened up to ask the question:

“What governance framework will we all need to have in place for the future?”

For the debate to be meaningful it must encompass all corners of the industry: the schemes, the trustees, the advisers and the regulatory bodies.

eShare, Governance Software Specialists, set out with one main goal – to help schemes improve their standards of governance.  To achieve this goal they have worked with their clients to develop a product which helps schemes manage their governance activities more efficiently.  Automated workflow processes ensure ongoing compliance with the Codes of Practice.  Now they are taking this a step further and in partnership with Microsoft, eShare are hosting a free seminar to look at Pensions Governance in 2012, what the pensions landscape is likely to be like 5 years from now and how schemes and their trustees can cope in this changing environment.  eShare have secured speakers from throughout the industry to provide their views on the future and offer schemes advice on how they can prepare. 

For DC schemes the seminar is particularly relevant.  To date governance has generally been associated with DB schemes.  However the characteristics of good governance are not affected by the issue at hand.  For DC schemes playing catch up, the issues are more pointed. 

Speakers from the Regulator and PPF will describe what they want to see schemes doing in 2012 and what they see as being the issues of the day that we will be tackling then.

A session will focus on the activities of leading schemes in this area, the measures they have taken and expect to make going forward. 

Microsoft and eShare will present their vision of the technology that is emerging that will enable all this to be possible without us having to quadruple our workforce.  They will explain how you can raise standards of governance and at the same time cut through the red tape.

Representatives from the Independent Trustee side will speak on how they see the future changing and the barriers that will be overcome.

We need to act now

Pension Schemes cannot afford to be reactive in their approach to governance – they cannot simply respond to the changing world around them.  Changes are happening every day and if funds are to remain successful and deliver for their members in this environment they need to act now and take a proactive approach.  They need to begin implementing appropriate tools ensuring the continuing effectiveness and efficiency of their schemes’ management.

Failure to plan and prepare for the future will result in poorly run schemes who are struggling to cope with the changes.  Failure to implement necessary tools will result in bad scheme management and poor governance.  This ultimately will lead the policymakers in a negative direction; however, we can adapt, change and welcome this new world.  Rather than complain about the regulatory burden we can look at how best to use this environment as a springboard to increase our effectiveness, improve our efficiency and ensure we continue to have a pensions system which is the envy of the world.

Schemes must act now, consider their future and plan ahead for 2012.  The future of Occupational Pensions depends on it.