“AMNT” or “APPT” – Why DB trustees don’t get DC!


appt small

Yesterday I gate-crashed two parties. Party one was held by the association of professional pension trustees at the Butchers livery Hall and party two was held by the association of member nominated trustees around the corner. Both parties were in the City and both APPT and AMNT were discussing the same thing- the relevance of trusteeship in 21st century UK pension schemes.

I have recently written that trusteeship, as we know it, has little to offer. The traditional skillset of Defined Benefit Trustees is about ensuring that what has been guaranteed to members is paid to members.

But the new world is not about guarantees, it is about meeting member’s expectations. The new trustee will be doing his job by working out what his or her member’s expect and managing those expectations about what can be reasonably delivered.

Morning –   appt small

At the APPT meeting, Mark Hoban spoke cogently on this subject. It would seem he understands the connection between the employer, the employer fiduciaries and the management and delivery to member’s expectations. I have heard Hoban speak before, usually in a hostile environment but yesterday I heard a conservative politician articulate the coalition’s agenda with precision and enthusiasm.

I did not have time to see how this went down with the professional trustees in the room, but I didn’t get the impression that they had quite got the import of Hoban’s message. There remains in this community’s approach to DC an aversion to change which can be summed up by an excellent quote I’ve snipped from an article by Frances Denmark


The “lifetime income strategies” in question refer to a concept being pioneered by Robin Diamonte, CIO of the UTC pension plans (who manage around £3. bn in UK pension plans). I will write more about LIS in future blogs as it is an attitude to DC investment that is very much about delivering to member’s expectations.

For Professional Trustees, the new ideas around risk-pooling, risk-sharing and concepts such as CDC and income drawdown seem full of risk with little opportunity. I suspect that the members of the schemes they are supposed to represent see things the other way around!

I suspect Mark Hoban sees things more from the member’s point of view.

What is important about the Hoban view of trusteeship is that it is founded in understanding what pension plan members want and managing around what they can reasonable expect.

For the professional trustees in the room, the agenda has been different , their agenda has been to keep schemes able to meet the promises that have been made and to manage compliance with regulations around those promises.

The change in mind set to considering risk in terms of not meeting member expectations does not appear to have happened (yet).

Afternoon – AMNT

After a morning with the APPT, I legged it across the City to the posh offices of Sacker & Co, who were hosting a meeting of the AMNT.

I know many of this lot, they are by and large union sponsored fiduciaries whose agenda is very simple- to ensure that members of their schemes get paid what they are promised. Because they are not paid for by the sponsor (like the aforementioned professional trustees), their focus is much more member focussed.

In theory, they should understand the new pension freedoms in terms of the member’s reasonable expectations and should be considering DC as a great opportunity to help. But as with the APPT I didn’t really feel the people in the room got it. I hear a long presentation about Captain Bob Maxwell and how his pension plans had been messed about with. There was a talk about how member representative would be increasingly involved in the management of the Local Government Pension Schemes and there was a brief run through the legislation surrounding the new insurance fiduciary bodies- the IGCs.

But I wonder whether there is the energy within this group of (mainly retired) pension veterans to really take forward their vision of “protecting the member’s interests” into DC. In truth, I sensed they found the world of IGCs a little challenging.

The change in mind set to considering risk in terms of not meeting member expectations does not appear to have happened (yet).


So what was my conclusion after a day with the corporately and union sponsored trustees?

I fear my original position, articulated in my blog “so what’s the point of the DC trustee” holds true. Really understanding the implications of the risk transfer from DB to DC means changing the whole way you do things. It takes a Robin Diamonte, or a Mark Hoban to see this. Interestingly both figures are from outside a pensions background.

For me, the most useful information on how to run a DC scheme is fed back from the SMEs and Micros I consult through www.pensionplaypen.com and through the financial education work we do through First Actuarial. You cannot understand what members want by sitting in the Butchers Hall or Sackers offices. The AMNT do at least talk to their members ( I sense the APPT don’t) but the headwinds for both groups of trustees are immense.

We need a new kind of fiduciary, people like Michelle Cracknell who have never been in DB and come at pensions afresh, people like Mark Hoban who have a genuine interest in improving outcomes and can talk about bringing the new technologies to the help of old problems.

I am confident we will find these people- the public service ethos in this country runs deep. But I do not think we will find them from the APPT and the AMNT.


About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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3 Responses to “AMNT” or “APPT” – Why DB trustees don’t get DC!

  1. George Kirrin says:

    Well said, Henry, although I fear the APPTs may ignore you.

    I came into trusteeship in the last century when we had automatic entry for new members and trustees saw their role as developing their schemes, investing the capital entrusted to them in ways to meet members’ reasonable expectations of a decent pension in retirement and a tax free lump sum
    on retirement.

    Then the myopic legislators (and I include many scheme legal advisers here) and regulators got their oars in and changed the rules. So those trustees who didn’t just give up the ghost and retire were faced with closed schemes and prioritisation of securing past benefits over developing future benefits.

    But I’m less convinced about your support for Ms Robin, though I look forward to your future post(s) on what she brings to the party. I’m not impressed with the following which is attributed to her, though:

    “We do something called structured beta. It’s not smart beta; it’s structured beta. We get exposure to a market through futures, and then we have a portable alpha portfolio on that.”

  2. AMNT says:

    The problem with gatecrashing somebody’s party is you don’t know what’s going on and you don’t know most of the people there. Poor Henry seems to be in that category. Had he been paying attention, or not left so soon, he would have heard the discussion the trustees had about IGCs, and the concern that the DWP and FCA seem quite happy for these new bodies to forge ahead without any member representation.
    The Goode Report on the lessons to be learned from the Robert Maxwell pension scandal directly led to a requirement for member nominated trustees, in order to avoid such frauds happening again. Clearly Henry couldn’t see – or hear- the parallels being drawn between that recommendation in the 90s and what is happening today. Given the torrent of City scandals in the intervening years, one would assume that it is just as important now as it was then to ensure member representation on IGCs. But sadly that point seems to have been lost on Henry, so hotly was he in pursuit of his own agenda. Oh, and he was wrong about most people being retired. Indeed, it seemed to us that he was one of the oldest people there.

  3. Julie richards says:

    The problem with sweeping statements is that they are just that. And as for “political” sound bites – there are so many passing bandwagons that I would get travel sick if I tried to accommodate all. I think there are many, including in the Corporate sector, who do understand the nature of fiduciary responsibilities within the wider DB/DC context, including some very practical matters and the commercial pressures faced by employers and employees (as opposed to advisers…). Ironically, we probably do more to bring these things back to a level that the majority of our employees can understand than those creating the headlines.

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