I have been employed in the pensions industry for almost 25 years and I started working with Capital Cranfield as an independent professional trustee at the beginning of January 2011.
I currently have a portfolio that covers 12 pension schemes, with assets ranging from £10 million to £250 million and in industry sectors that include manufacturing, retail, distribution, engineering and construction. Most of them are defined benefit pension schemes and all but one of them is closed to future accrual; I also work with one defined contribution scheme.
My job requires me to deal with a wide variety of people, including fellow trustees from a variety of backgrounds, employer representatives and advisers.
What challenges have you come across and how did you overcome these?
Although the issues for most schemes are somewhat similar, the way in which decisions are reached and problems are solved is often quite different. I find that each trustee board has its own chemistry, driven by the characteristics of the particular individuals around the table, the culture of the sponsoring employer and the board’s relationship with its advisers.
In a number of cases, my schemes’ sponsoring employers have overseas parent companies – this brings its own particular challenges in terms of communicating and negotiating upon what are often complex and significant financial issues. This is especially so at present, when schemes are faced with a number of very tough problems to solve. Valuations are especially tough in the present economic environment – I’ve been involved in four that have completed very recently. Inevitably, the cash implications of increased deficits are somewhat unpalatable for employers at just the time when their business environment is also very testing.
This leads to increasingly difficult conversations and a more acute focus on conflicts; often a key driver for appointing professional independent trustees. However, in my experience, conflicts are not necessarily a barrier to achieving good outcomes; although they need to be handled sensitively, they can sometimes be used constructively to help to contribute to good debate and decision-making.
A number of my schemes also value the investment experience that a professional trustee can bring. The asset classes and tools available to trustees have become increasingly complex, certainly compared to the 1980s when I first became involved with pension schemes. This creates an increasing governance challenge, in terms of devising strategy, constructing portfolios, appointing managers and monitoring performance.
De-risking is also a key theme, with a much stronger emphasis on monitoring funding levels, as opposed to straightforward investment performance. Two of my schemes have recently decided to pursue delegated de-risking solutions as a means of trying to become ‘smarter’ about managing investments in circumstances where their own resources don’t permit them to do this themselves.
Many of my schemes are also thinking carefully about their member records. Some are improving their data in order to be ready for buy-out, which is becoming a more realistic aspiration over the short to medium term – ‘cheque writing distance’ is not so very far away. Others are uncovering historical problems around how benefits have been calculated or data has been recorded, with a corresponding need to correct matters. Of course, automatic enrolment is a whole brand new problem to be tackled.
All of these issues require a wide skill-set, a willingness to ‘have a go’ and tackle new things and an ability to deal with a wide range of people – which are the very things that attracted me to being a professional trustee.
What is a typical day like for you?
A typical day involves either attending meetings or spending quite some time dealing with emails or on the telephone. On average I tend to work about four days a week, although in practice this varies widely according to the time of year and also the particular activity of each individual scheme.
The fact that my total overall work commitments are not designed to be a full-time job means that I have natural capacity to deal with peaks and troughs of work – it also allows me to achieve some of that elusive ‘work-life balance’!