David Fogarty

Responding to the DWP’s recent call for evidence on the future or pension trusteeship, David Fogarty, a director and professional Trustee at Dalriada Trustees, said the call for evidence was an opportunity to reshape what trusteeship looks like.

“We generally think about trusteeship as a trustee board structure including a broad range of skills and knowledge including member nominated trustee that meets quarterly or even less frequently.

 “However, comparable financial entities – banks, building societies and life insurance companies – do not work in this way to manage complex financial structures. Rather they use a team of experts alongside robust systems who manage risks and opportunities on a daily/hourly basis.  Revisiting how trusteeship should be structured could allow the management of schemes to become akin to that approach.”

According to his Dalriada biography , David Fogarty believes  that trustee decisions need to be active and based on a full understanding of the approach, rather than on adviser recommendations that are approved without deliberation and challenge.

In his response to the consultation, Fogarty continues

“We see effective trusteeship and consolidation as overlapping and look forward to the opportunity to respond to the proposed changes through the consultation windows in the expectation that outcomes for members and for sponsors can be enhanced.”

This is sensible. there aren’t enough David Fogartys to manage the occupational schemes that remain. Whether DB or DC, it makes no sense to keep trustees occupied in tasks where they struggle to add value.

The link between sponsor and scheme may be strong enough to merit the scheme continues, but only if the scheme is valuable to members, and then where the cost of running the scheme can be factored into the VFM equation.

Trustees must set the bar higher for themselves. Like David , they should benchmark their management against the insurance companies and consolidators who now offer an alternative solution to their sponsors and they should not vote for self-preservation over the interests of their members.

Nor should they disregard the impact their costs have on their employer’s covenant – to the scheme and to the employer’s workforce. If anthe cost of running an occupational scheme is preventing an adequate contribution to a master trust , then a decision needs to be made.

The Government is right, we need Trustees to get with the programme or be consolidated or wound up. The programme is managed by outcomes achieved, not by tasks ticked off.

This is part of the change of mindset that Nausicaa Delfas has asked for.  We will not get it immediately, it will take time for the message to get home, but if we think that trustees have the right to determine their future, we are mistaken, their future is determined by the outcomes of their actions.