Is AAF fit for today? What should Trustees be considering?
Is AAF fit for today? What should Trustees be considering? AAF 01/20 reports began appearing
Pi Partnership’s Response to the “Fit for the Future” LGPS Consultation
Historically there has been little overlap between professional trustees and the LGPS. That may be about to change.
Pi hopes that when the Government reacts to the “Fit for the Future” consultation responses it confirms the role and requirements for professionally qualified pension scheme (not simply investment) advisers, and allows LGPS members and sponsoring employers to benefit in the same way private sector pension schemes have from increased professional trustee governance over the last few years.
In the recent “Fit for the Future” LGPS consultation that closed last week the government has suggested that each LGPS fund should be “required to appoint an independent person who is a pension professional….as a voting member of the Pensions Committee or as an adviser. The role would encompass supporting the committee on investment strategy, governance and administration.” The Government expects that suitable pensions professionals would be PMI or APPT accredited and qualified, and have significant experience.
LGPS And Professional Trustees
Currently, LGPS independent advisers typically focus solely on investment rather than broader pension scheme governance and management. Broadening and professionalising this external input appears to be the Government’s intention here.
Pi fully supports these proposals.
Looking through the consultation responses that have been published so far, there is generally little opposition to this initiative. What concern there is centres around a need for additional clarity of the scope of the role and a worry that appointees will be considered as “quasi-professional trustee” experts to whom other Committee members would defer, thus undermining democratic accountability.
An essential skill for professional trustee members of private sector pension scheme trustee boards, exemplified by the team at Pi, is the acute awareness of this risk and the ability to avoid or manage it. We believe that if appropriately qualified and experienced professional trustees are appointed, the same effective risk management will happen across the LGPS.
And offsetting this perceived, rather than real risk, is the opportunity to bring proven pension scheme governance skills, focus on member outcomes, the exercise of fiduciary duty, regulatory compliance, and very importantly, holding outsourced fiduciary managers (the newly envisaged role for Pool Companies) to account.
Mike Weston is a professional pension trustee who was the first Chief Executive of the Pensions Infrastructure Platform (PiP), Mike led the development of a £1bn infrastructure investment manager during his 4 years tenure. A former chief executive of LGPS Central, one of eight Local Government Pension Scheme, he brings both private and public sector experience to his trustee appointments.
Find out more about LGPS here.
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