“The trustee system has grown up over decades, centuries in some regions. We are asking whether this is still the best way to approach pensions management. It could be that it is. But the point is that we are reviewing the system extremely thoroughly,” said Andy Fleming, NAPF spokesman.
Chris Lewin, former head of the UK pension fund of Unilever, will lead the NAPF investigation into trustee training. The Unilever trustees are no strangers to pension fund problems, having sued their one-time fund manager Merrill Lynch over poor investment performance.
Mr Lewin will establish levels of expertise and competence that pensions professionals should possess. These will be presented within two years. “At a time when there is greater scrutiny than ever of the expertise of trustees – not least from the government – the need for agreed standards is more pressing than ever,” said Mr Lewin.
The move was followed by the discovery of a Ł600bn shortfall in the UK’s public sector pension system.
The figure, calculated by consultants Watson Wyatt, is more than 50 per cent higher than the most recently published official estimate into the funding of pension fund liabilities. Stephen Yeo, senior consultant at Wyatt, said: “the pressure that has forced the private sector to account for pension costs in a transparent way is only slowly having an effect on the public sector. Given the enormous size of the liabilities involved, it is vital that the true costs of all pensions is recognised”.
Further hints at the need to overhaul UK pensions came in the latest report from market research firm, the Pension Fund Partnership (PFP). It found that since 2001 about four in 10 defined benefit schemes had closed to new members.
The average member contribution rate to defined benefit schemes rose by about 12 per cent in the past two years compared to what they were paying in 2001, while companies had barely increased their side of contributions at all, the PFP found.
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