The global impact of living longer affects almost everything we do. One role that has already changed significantly and will continue to change is that of pension scheme trustee.
A decade ago pension scheme trustees were guardians of the funds with a fiduciary responsibility to ensure that schemes assets were sufficient to meet liabilities. The role involved overseeing the management and administration of the funds and negotiating with the sponsor if additional funding was required.
Today this role continues for only a small ring-fenced part of many plans and Trustees are increasingly focused on the design of the plan and selecting which funds to offer members. Member education is also important as the investment risk has passed from the sponsor to the member.
Looking ahead the Trustee role is likely to change again – the existing roles will continue but with life-time allowances reducing almost as fast as the annuity rates pension schemes will increasingly become just one part of a members retirement strategy. Trustees will have an increased responsibility for ensuring members are aware of the likely value of their company pension and the need to make alternative and additional arrangements for retirement.
Another, more controversial, role may involve conflict with the sponsor. Today most defined benefit plan sponsors remain committed to their obligations and most trustees believe that any shortfall would be addressed. However, in 20 years time there could a management team with no loyalty to or interest in their old company plan who find themselves faced with a stark choice – invest in the companies future or spend the money on bigger pensions for staff who left decades earlier. Once one ‘breaks ranks’ there would be significant pressure on the rest to follow – only then will Trustees have their mettle tested.