Over the last few years, the Pensions Regulator has demonstrated a consistent focus on governance and, in particular, the need for trustees to demonstrate effective risk management processes. At the same time, the regular stream of cases in the news has led to a very public scrutiny of how large pension schemes are managed and the decisions being made by trustee boards. This has been a wake-up call for many trustees, who now realise that merely trying to do the right thing is not enough. It is essential to be able to demonstrate that the decisions they have taken are appropriate and effective, in the context of a robust risk management framework.
At the same time, trustees are faced with increasingly complex decisions. Solutions being put forward by advisers for managing pension liability are becoming more sophisticated and multi-faceted. So how do trustees demonstrate effective decision-making as complexity increases.
Finally, there is an increasing need for trustees to be ale to act quickly to grasp opportunities that may appear (and, equally, disappear) over short timeframes. Demonstrating appropriate decision-making under time pressure can be particularly challenging.
In this Perspective, Leonard Bowman considers why governance is changing, the features of good governance and how schemes are choosing to respond.