The proposed measures in respect of investment allocation, the consolidation of “small pots”, delivering value for money and requiring schemes to offer suitable retirement products by placing duties on trustees are all of huge importance to all trustees and APPT members as to how these ambitions are delivered.
APPT Chair, Harus Rai, commented: “Given our fiduciary duty to act in the best interests of the beneficiaries of pension schemes, as professional trustees we hold somewhat different duties from those that preoccupy other bodies active in the pensions sector. We are looking forward to meeting the new Minister to underline some of the key issues that need addressing in the governance space and that we find are of concern to both trustees and scheme members.”
The APPT letter to the Minister includes a ‘shopping list’ of areas where trustees are looking forward to action and, importantly, a healthy dialogue with the Minister’s policy team in the weeks ahead. Key topics raised by the APPT are:
In the DC space – and of relevance in respect of the promised pensions review – APPT says trustee boards and increasingly members are looking for a stronger lead from government beyond dashboard and VFM reforms to have a plan to encourage higher minimum pension contributions and, as part of this, to progress wider risk sharing reforms such as CDC that offer the potential for better pension outcomes,
Early action is needed so trustees and sponsoring employers have adequate time to meet scheme funding requirements specified in regulations, but where the delay in launching the corresponding DB scheme Funding Code and covenant guidance is frustrating action and causing concern,
Looking to her co-Ministerial appointment in the Treasury, APPT says it needs the Minister’s help alongside the Economic Secretary to ensure HMRC resolves in quick-time gaps in regulations needed so schemes can progress many members’ outstanding lifetime allowance (LTA) tax queries,
In the DB space, trustees are very concerned about the outcome of the Virgin Media case which has the potential to create another high cost call on schemes in terms of time and fees to investigate historic scheme amendments with little or no benefit to most members and potentially to the detriment of sponsoring employers’ businesses in some cases. Early DWP regulatory action could resolve the issue,
Given trustees’ fiduciary duties, to achieve significant extra investment in UK assets in our open economy is likely to require a significant financial incentive. APPT says this needs to be fully considered by the Minister’s Treasury colleagues ahead of the forthcoming Budget,
APPT is keen that the Government continues to enhance schemes’ governance by strong encouragements and measures including requiring that accredited professional trustees be appointed to scheme governance bodies (this not currently being a mandatory requirement),
APPT members and trustees generally are keen to hear more on the climate transition requirements that the Government is considering in relation to scheme investments,
Recent proposals for the sharing of surplus in relation to DB schemes, consulted upon by the outgoing government, if they are to be pursued, need to be very carefully handled if trustees (and possibly members) aren’t to be put in a very difficult position,
The announcement on Superfund legislation is welcomed, but APPT would want DB master trusts and other commercial consolidators also to be encouraged in any further push for scheme consolidation with the role of the PPF primarily focussed on those schemes where there is not a commercial option.
The APPT notes that its 421 accredited members work as professional trustees at over 1,500 defined benefit (DB) schemes. Many members also sit on trustee boards for defined contribution (DC) schemes including DC master trusts. Members typically work on multiple appointments and in total are responsible for managing schemes with assets of over £1.2tn. Many of the APPT’s members act as chairs of the trustee body and as professional corporate sole trustees, which represents a fast-growing proportion of the governance arrangements of occupational schemes.
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