Navigating An Auspicious Regulatory Risk Governance Path To Seal Your Pension Fund’s Success or...
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Transcript of Navigating An Auspicious Regulatory Risk Governance Path To Seal Your Pension Fund’s Success or...
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Navigating An Auspicious Regulatory Risk Governance Path To Seal Your Pension Fund’s Success UK Pensions and Investments Summit 2011
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or
It’s Just Not Good Enough!
UK Pensions and Investments Summit 2011
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What’s the point?
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What’s the point?
•The old cliché….to pay the right benefits to the right people at the right time
•Good governance should help efficiently achieve this objective
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Good Governance
Procedures and governance tools
Conflicts of Interest Knowledge andUnderstanding
Funding and Investment
Communications
Good Governance
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Good Governance
Assistance in the form of:
Advice from professionals
Codes of Practice
Independent and internal audits
tPR guidance
Industry surveys
1. Meetings
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1. Meetings -Why is it a problem? Meetings The good trustee boards schedule
meetings in advance and stick to them…..but some meet infrequently
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1. Meetings - Proposal Meetings The good trustee boards schedule meetings in
advance and stick to them…..but some meet infrequently
Mandatory meeting requirements based on size of scheme e.g. minimum 4 meetings per annum for schemes with assets of £200m+
“Must do” or “You cannot be serious”?
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2. Trustee Training
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2.Trustee Training -Why is it a problem? Trustee training Some trustees are clearly not properly
equipped to fulfil their duties
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2.Trustee Training - Proposal Trustee training Some trustees are clearly not properly
equipped to fulfil their duties Completion of the Regulator’s trustee
toolkit is mandatory to be able to act as a trustee
“Rolls Royce” or “Robin Reliant”?
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3. Conflicts of interest
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3. Conflict of interest - Why is it a problem? Conflicts of interest They are to be expected, and can
generally be managed, but sometimes actual or perceived conflict is not dealt with as robustly as it should
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3.Conflict of Interest - Proposal Conflicts of interest They are to be expected, and can generally be
managed, but sometimes actual or perceived conflict is not dealt with as robustly as it should
The Chairman, CEO and CFO should all be prohibited from being an employer-appointed trustee of an occupational pension scheme
“The Ivy” or “McDonalds”?
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4. Governance Tools
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4. Governance Tools-Why is it a problem? Governance Tools Trustees are left to their own devices and
practices vary from well organised to extremely poor
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4.Governance Tools - Proposal Governance Tools Trustees are left to their own devices and
practices vary from well organised to extremely poor
Mandatory risk register, business plan, review of advisers, register of interests and conflicts
“Barcelona” or “Hartlepool United”?
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5. Employer Covenant Assessment
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5.Employer Covenant - Why is it a problem? Employer Covenant Assessment Practices vary and many trustees are still
not sure how far they should go
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5. Employer Covenant - Proposal Employer Covenant Assessment Practices vary and many trustees are still not
sure how far they should go Minimum tests of strength of covenant
assessment for DB schemes
“Sandbanks” or “Middlesbrough”?
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6. Timely Funding Updates
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6. Timely Funding Updates- Why is it a problem?
Reacting to Funding Requirements Current statutory deadlines are such that
by the time agreement is reached the next funding update is due or has already been prepared
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6. Timely Funding Updates - Proposal
Reacting to Funding Requirements Current statutory deadlines are such that by the
time agreement is reached the next funding update is due or has already been prepared
Valuations and new schedules of contributions should be signed off and implemented within 9 months of the effective date of the valuation
“Inspired” or “Crackpot”?
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7. Member Communication
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7. Member communication-Why is it a problem? Member Communication There’s a great deal happening in the
pensions world but few schemes communicate those issues well and rely on the Summary Funding Statement or annual benefit statement
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7. Member Communication - Proposal Member Communication There’s a great deal happening in the pensions
world but few schemes communicate those issues well and rely on the Summary Funding Statement or annual benefit statement
Mandatory communication with members within 3 months of the accounts being signed off (annual newsletter)
“William Shakespeare” or “Jeffrey Archer”?
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8. DC Communication
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8. DC Communication - Why is it a problem? DC Communication General appreciation and understanding
of the DC pension is poor
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8. DC Communication - Proposal DC Communication General appreciation and understanding of the
DC pension is poor Strengthened mandatory communication
with DC members re their potential benefits
“Mozart” or “Sex Pistols”?
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9. Independent Trustees
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9. Independent Trustees- Why is it a problem? Independent Trustees Many trustee boards have too many
potential conflicts of interest but employers shy away from appointing an independent trustee
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9. Independent Trustees- Proposal Independent Trustees Many trustee boards have too many potential
conflicts of interest but employers shy away from appointing an independent trustee
Reduced PPF levy for schemes with independent trustees
“Go for it” or “Non-starter”?
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The Top Nine Mandatory meetings Mandatory toolkit Ban on Chair, CEO, CFO being ENTs Mandatory internal controls documentation Core covenant assessment measures Shorter valuation timescales Annual newsletters Clearer communications for DC members Incentives for appointing independent trustees
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Disclaimer
The views expressed during this presentation are those of Stephen Mallett and/or Alan Grant and
do not necessarily reflect the views of their employer or colleagues