Ramblings on trustees and what happens when you do!

I know I overuse Pension Oldie, but he’s one of the few people who talks technically that I understand , agree with and like a a bloke/bloke-ette.

I will not go down this ambivalent gender route, Oldie is a bloke- but he sounds like a woman because he has a soft and pitched voice and he thinks like a woman (eg he thinks about other people and not about himself).

He has been listening to Alan Pickering who appeared on the VFM podcast last week(my report on this link).

Here is what Pension Oldie had to say in a mail to me last night. I was busy sorting things out on something else and missed posting it this morning.

I  listened with great interest and much admiration to Nico and Darren’s podcast with Alan Pickering this morning.  The main takeaway I got is the importance of the Trustee role in both DB and DC Mastertrusts.

1. I particularly recall the advice given by his parents to to Alan that he should choose his employer by the pension they provided.  That was indeed a commonly repeated mantra in the 1960s within my earshot.
2. The importance of Trustee authority and freedom particularly against regulations and “guidance”, for example Alan’s comment that “engage common sense” should be final check item on every risk register.
3. The need for DEI on Trustee Boards – but not diversity in terms of age, gender or ethnicity but diversity in terms of skills, experience and background. A clear case for member nominated trustees – but not sure how this would work with DC multi-employer schemes.
4. The need for absolute independence of the Trustee from their service providers, particularly the investment advisor/manager.
5. There was a brief reference to a Public Guardian Court case which I subsequently searched concerning Irwin Mitchell solicitors as Trustee appointing Irwin Mitchell Asset Management as investment advisers after a review / beauty parade type process including a personal representative of the subject of the guardianship (a very close approximation to the relationship with the sponsor of a pension scheme trust).  The senior judge held that the common ownership was a clear Trustee conflict of interest that could not be put right by any procedural processes.    You can read a report of the case at Irwin Mitchell Trust Corporation v PW & The Public Guardian | 39 Essex Chambers  This is entirely my interpretation and I have not sought to confirm my interpretation from any other source and I don’t know whether the judgement is being appealed or not.
6. If we bring this across to pension trust situation, I believe mastertrusts are likely to be facing a significant risk associated with an appropriately independent trustee board requiring the freedom as it thinks appropriate to replace a scheme sponsor/provider providing investment or administration services.
7. Similarly a DB sponsor should not engage a professional trustee assuming they will be saving costs by a “one stop shop” covering administration and investment manager services .  This significantly undermines the business case for private equity professional trustee firms.
8. When I first became involved with a Pension Trustee Board in the 1980s, I was told that the first duty of a trustee was to take advice where appropriate but to challenge that advice and ask the advisor to justify why it was appropriate to the particular situation under review.  It appears to me that duty has been downplayed since then.

Once again we live in interesting pension times!

Quite right Oldie;  if we start taking Trustees for granted , we could end up like Trump and Putin, sorting out problems with no regard for the people suffering despicable treatment.