Avengers: Endgame was the blockbuster to end all Avengers films. Several actors were apparently out of contract at the end of the film, which may help explain which superheroes died or disappeared off into a life of obscurity. Hopefully Marvel fans will forgive us when we turn the focus on advisers to DB and DC pension schemes and ask whether some of them should also now be facing termination?
In this Pensions Perspective, Andrew Udale-Smith looks first at the different types of adviser review and when and how they might best be used. Then he focuses on how to design a smooth and efficient process for a full market tender…
ROOT and branch
For a picture of bac’s approach to DB governance, imagine a flourishing tree. The root system is not usually visible but it’s crucial to the health of the whole tree. So too is the environment in which the tree lives, particularly the rain and sunlight that it needs to thrive.
In this Pensions Perspective, Andrew Udale-Smith aims to get to the ROOT of what makes for good governance for a DB scheme. The article looks at Risk management, the two branches of Organisational and Operational governance and the use of Technology. For a start, there is no “one-size fits all” when it comes to governance, with each scheme and trustee board needing to develop an approach which works best for them…
Working hand in glove
Funding valuations have often been a source of conflict, or at least robust negotiation, between companies and trustees. However, a small but growing number of companies are finding that working hand in glove with their trustees not only means a smoother valuation process but also leads to more effective funding and investment decisions.
In this Pensions Perspective, Andrew Udale-Smith looks at how this relatively new model of working together has come about and explains why it can often make good sense from the sponsoring employer’s perspective. Andrew suggests that, although some may protest that hand in glove was the way companies and trustees used to work, before the Regulator and a scheme-specific funding regime arrived on the scene in 2005, in most cases, that was often a relationship in which the company called the shots and the trustees followed. The model Andrew discusses here is quite different.
Governance in the spotlight
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.
Tapered annual allowance – the clock is ticking…
In his Pensions Perspective, Leonard Bowman looks at emerging company and employee experience following the end of the first year of the tapered annual allowance (TAA).
The issues are not surprising – indeed they were largely anticipated when the legislation was introduced. However, that does not make handling the TAA any easier and the sheer scale of the problem is only now beginning to dawn on some companies. It is vital that companies get their strategy towards the TAA right to avoid a flood of discontent in the future.