COVID-19: Pension Scheme governance issues

Recently, we provided a summary of some of the governance issues and risks that Trustees should consider, to ensure that the scheme objectives continue to be met. Areas covered were Trustee effectiveness, administration, covenant and funding, investment and fraud.

In the second part of our series, we are looking into the area of Trustee effectiveness in more detail. The overriding objectives of Trustee effectiveness is to ensure that:

As lockdown has been in place for nearly three months, we are getting to the next cycle of Trustee and committee meetings. Therefore, this is perfect time to take a step back and analyse whether the above objectives are being met.

Virtual meetings are now the new norm and although restrictions are slowly being lifted, we would expect virtual meetings to continue for the foreseeable future. As a result, we believe the points listed below are important to consider.

Length and frequency of meetings

We have noticed that shorter more frequent meetings ensure that the board remains engaged and energised. We would suggest meetings last no longer than two to three hours and are held more frequently.

Information received

We recognise the need to reduce the information provided to Trustees, but providers need to ensure that the quality and content of that information remains relevant to the scheme. The overriding objective is that Trustees are receiving the right information at the right time, to enable them to make the right decisions. Consequently, the information provided should match the objectives of the meeting.

Formality

Some people thrive in a virtual meeting space whereas others become reserved. Therefore, more structure may be required to ensure that everyone is given equal opportunity to provide input into the decision making process.

Agreed actions

We have seen possible action points being lost in a virtual meeting space, as sometimes there is confusion on who said what, when. Consequently, at the close of each meeting a summary of the agreed action points should be confirmed.

Advisors

In the first round of virtual Trustee meetings we have seen many advisors being part of the process, as usual. Trustees need to consider whether this is still relevant in light of reduced agendas and time available.

Approval process

We have seen delays in the approval of items due to the lack of appropriate systems in place, or that simply online signatures not being available at that time. A review of the timeliness of the authorisation process should be completed to ensure that this remains fit for purpose.

Feedback

As virtual meeting are here to stay, improving on the process is always key. We suggest that feedback after the meetings is obtained from all parties, to ensure that the meetings remain fit for purpose.

How we can help

We believe that the continued success of your pension scheme in providing the best possible outcomes for members is dependent on ensuring that trustees meetings continue to remain relevant and add to the overall governance of the scheme.

In our next focussed article we will be covering administration, but if you wish to discuss this further in the meantime then please contact us.