24 April 2007
Trustees to be made accountable for their decision making
Governance Software Specialists eShare claim that trustees are going to be made more accountable for their decision making; a view mirrored by Pension Ombudsman David Laverick.
At the Occupational Pensions Defence Union earlier this month, Laverick expressed his doubts in the effectiveness of the current model for a pensions trust saying, “There are aspects of the current model which trouble me.”
The fact that the current model is set in the broader context of trust law is something which the Ombudsman feels can impact on its effectiveness within an occupational pension scheme.
Using examples within the public sector, specifically citing the case of a hospital, Laverick expressed his views for the future:
“I am a great deal happier with the public sectors concept of overall responsibility rather than the protected status of the trustee.”
Within the hospital scenario, the trustees are held accountable, specifically in relation to their decision making. Trustees are made to be more responsible over their actions and this is something which the Ombudsman wants to see applied to the pensions industry.
“The role of becoming a trustee just gets heavier and heavier,” commented Alister Esam, Managing Director of eShare.
Trustees need to implement systems which will help to ensure decisions are made using all relevant information. Trustees should have access to, and be able to consider all precedent decisions which may be of relevance. Decision making must follow agreed processes to ensure consistency between decisions. Audit trails will also need to be maintained to demonstrate process has been followed. These audit trails must in time improve transparency.
“At eShare, we believe in giving trustees the tools to perform their role effectively,” said Esam. “We developed eDecisions to help trustees enhance their decision making whilst improving transparency to the process – so any outsider looking in can see exactly why a decision was reached.”
“Our clients have enhanced their decision making processes through using eDecisions, allowing their trustees to demonstrate their compliance with the Ombudsman’s wishes at no additional effort. There is less risk due to the increased consistency but the real beneficiaries are the members who will benefit from better, more informed decisions. ”
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