The trouble with trustees ( DWP and HMT get “constructively tough”)

The wildest of all the consultations and calls for evidence issued today (July 11) is undoubtedly the call for evidence on trustee skills, capability and culture. The following blog is written in a spirit of “constructive toughness” (see below).

The changing face of trustees

Trustees used to inoffensive and inconspicuous , turning up at NAPF events and leaving with large numbers of cuddly toys and a hangover. Nowadays they are selected though procurement exercises , have to pass exams and are expert in all kinds of risk.

In all respects, Trustees are at the wokey end of work, primied for D&I conversations, eagerly anticipating Scope 4 mitigating Scope 3 and tuned into natural capital.

However, the DWP has identified a weakness in their DNA – or should I say “culture”, they find it difficult to take a decision that involves taking rather than avoiding risk.

As the the lady says , many trustees are currently engaged in transferring what might become productive assets to insurers by the billion-load.

Handing over the family silver to the insurers means it is lost to the kind of productive finance the Government is trying to encourage – and buy-out could be a big problem for the gilt market.

 It’s not just about DB

The environment trustees operate in includes DC, DB and CDC – (though I have never met a CDC trustee). The DWP clearly worries that trustees may not bedoing all they can for the savers

At the heart of our ambition is ensuring that the retirement savings of all hardworking savers are properly looked after and helped to grow. Automatic enrolment has been a great success, but we must make sure that we get the maximum value for every penny saved.

Some trustees don’t appear to be helping, inconveniently pointing out conflicts of interest, fiduciary duties and suchlike nonsense that gets in the way of members of pension schemes getting the full value for their money (eg not investing in productive finance).

The tone of the consultation is a little Mao-ist. You half expect fingered trustees to be marched off to re-education camps as part of their cultural revolution.

It is concerning that some trustees, especially at the smaller end of the market, appear to be unaware of many of their duties and legal obligations. The number of trustees engaging with the guidance is worryingly low.

This is joint DWP/Treasury production – with the Treasury having an interest in the lack of positive decisions being taken to invest in productive capital/UK growth etc. Re-education is clearly on the agenda.

The trouble with trustees

The trouble with trustees is that they aren’t particularly keen on doing things that make no sense, like spending time producing statements that no one reads- least of all the Pensions Regulator. Too honest to lie about their crimes , they regularly grass themselves up , gleefully accepting they’re not aware of their duties let alone how to fulfill them.


Which is just as well – since most of the hoops they are asked to jump through as a result of TPR guidance aren’t worth a whoop.

The solution to this problem, as with so much else, rests in Australia where Trustees apparently have no scruples getting stuck in to the kind of investments that Chancellor Hunt appreciates. It’s part of their culture

Former Australian cultural attache

Of course we have had lectures in Australian culture before, not least from this handsome fellow and I for one would be quite happy to sink a few tinnies with Les.

Unfortunately there appears to be a downside to learning on the job with the cultural attache

Evidence from Australia’s“constructively tough” approach to supervision of trustees shows the importance of focusing on good governance to improve results for members

As the song goes, – “when the going gets constructively tough…”

Investment consultants also in the dock

The DWP/HMT investigation team has been reading The City of London Research Report
“Powerful Pensions” (2023)12, which established that investment consultants’
careers often begin in actuarial roles and, therefore, they may have limited
experience with private assets such as financial and professional service tech.
This could include a lack of familiarity with illiquid asset classes, equities in
general, and early-stage investment.

Clearly they too are in line for re-education, hopefully in camps screened for actuarial pollution. I will be writing in to demand a full detox of any educational facility to include the abolition of all assumptions and a focus on political necessities.

Step forward the Chair of Trustees of one of Britain’s burgeoning bank owned master trusts

Well said that man – re-education complete!

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
This entry was posted in pensions and tagged , , , , . Bookmark the permalink.

2 Responses to The trouble with trustees ( DWP and HMT get “constructively tough”)

  1. byronmckeeby says:

    Surprised there are no trustee comments on here, Henry.

    I fear they’ve returned to being “[unoffendable] and inconspicuous”!

  2. Maggie Rodger says:

    Well if trustee comments are required..
    I wonder why, when the “wonderful” Australian model is lauded no-one ever mentions the inclusion of member trustees on their boards (unlike many of our master trusts).
    It’s almost as if there might be a correlation between the emphasis on member outcomes and member trustees…?

Leave a Reply