Trustee GAAPS - Increasing Demand for Investment Help for Trustees

Trusteeship Is an
Important Role

The independent trustee brings a wealth of relevant specialist knowledge and experience to your trustee board. In a relatively short amount of time, they will be able to add enormous value to your board of trustees.

In some ways, they can be compared to non-executive directors. Not only are the amounts of money involved similar, but in some respects, the independent trustee has even greater responsibility than a non-executive director, for example:

the NED is serving alongside full-time executive directors, and is sharing the responsibility with them, whereas...
the independent trustee is sitting alongside other part-time trustees, most or all of whom are not pension experts, and is sharing the responsibility with them alone.

In addition, the independent trustee may have more influence among the trustees than a non-executive Chairman of the Board, because he/she is often the most experienced member of the trustee body.

The risks are greater for trustees since they are personally liable, even though this is typically mitigated to a great extent by insurance and idemnities.

It is vital to get the right independent trustee.

Increasing Need for Independent Trustees

The Myners report focused attention on the need for trustees to have enough knowledge to address the investment issues that they faced. It is also suggested that trustees should form an investment subcommittee who would be expected to gain sufficient working knowledge particularly in the investment area.

The Turnbull report encouraged company boards to examine the risks their company faces, and to address those risks. It is commonly thought that this approach should carry through to the pension scheme, and that trustees should do a similar risk analysis.

It is expected that the combination of Myners and Turnbull will cause many company directors who now act as trustees to reconsider their position:

Myners has increased the knowledge required of trustees.
Turnbull has focussed attention on the risks of trying to get away without spending sufficient time to gain that knowledge.
Many directors will decide that they cannot afford the necessary time to gain sufficient knowledge and that the risk of not doing so is unacceptable.

As a result, they will decide to outsource the role of trusteeship to a part-time independent.

Increasing Demand for Investment Help for Trustees

Many larger schemes already have an independent trustee. They will have seen the added value that an independent can bring, and Trustee GAAPS believes that they will increase the number of independent trustees on their trustee board. This will strengthen the trustee board, and at the same time will free up valuable time of their key executives to concentrate on running the business.

Trustee GAAPS also believes that many schemes will see the benefit of appointing an independent trustee.

So there will be an increase in demand for such people, and greater responsibility will be placed on them. At the same time, there are many pension professionals coming up to retirement, with widely varying abilities and experience. Many who would not otherwise have done so will spot the bandwagon and jump on it; some of these will not be right for the job.

Trustee GAAPS will select the better candidates, and match them to your scheme.

Trustee GAAPS is a part of The GAAPS Group