On the go: Only 22 per cent of pension schemes have a defined plan of action if their funding level falls, according to a recent XPS Pensions governance survey, which found huge variations in standards of scheme management across the sector.
The consultancy's research of 100 defined benefit schemes showed that governance scores ranged from 30 to 97 (out of 100).
The average score was 69, with the higher scores skewed towards larger schemes – but worryingly, more than two thirds of schemes surveyed achieved a score of less than 75 out of 100.
Eight out of 10 schemes (79 per cent) had concerns over the quality of their data on members.
The survey also found that only 54 per cent of schemes are engaging with integrated risk management, and 22 per cent of pension schemes did not agree that they ‘manage conflicts well’.
Furthermore, 70 per cent of schemes have plans to improve member data, but only 42 per cent are monitoring progress.
One of the more challenging areas for trustees is assessing their own effectiveness and how well meetings are run. A typical scheme has four trustee meetings a year lasting four hours each, with larger schemes having sub-committees on investment and administration.
Meeting lengths ranged from 2 hours to 12 hours – hopefully spread over two days, XPS said - yet 20 per cent of respondents said they regularly run out of time at meetings and only 34 per cent of respondents said scheme decisions are usually made quickly. Failure to focus on key strategic decisions was also highlighted.
The need for improvement in some schemes was also echoed by the Pensions Regulator in its recent consultation on trusteeship and governance, with its executive director of regulatory policy, analysis and advice, David Fairs, pointing to: “a subset of disengaged trustees who either refuse or are unable to improve standards in their schemes.”
Commenting on the findings, Rob Wallace, principal at XPS Pensions, said: “Our survey backs up TPR’s view that there is more to do in this area. Governance remains a hot topic for TPR, with its recent consultation looking to drive up standards of trusteeship and governance.”
