On the go: Three-quarters of employers fear the trustees of their pension schemes will consider resigning rather than face an “onslaught” of regulatory and legislative change, according to a survey from the Association of Consulting Actuaries.
The ACA’s pension trends survey, which polled 212 employers, found that besides the 76 per cent of employers fearing a trustee exodus, almost nine in 10 (88 per cent) expect to struggle convincing people to take on the burdens of trusteeship, due to the scale of new responsibilities they are expected to assume.
Sole trusteeship has emerged as a potential solution, with 19 per cent saying they are considering taking on a sole trustee to simplify governance, while 7 per cent said they had done so within the past 10 years.
The increased governance burden translates into rising governance costs, as more than half (57 per cent) of respondents said they expected these costs to increase by 5 per cent a year.
The survey also found that despite progress being made on the pensions dashboards, only around half (51 per cent) of scheme trustees and governing bodies said they had taken action to clean up data for integration.
Additionally, more than half (58 per cent) said regulatory and legislative delays around consolidation for defined benefit schemes are hampering decision-making, leading to support for the concept declining by a fifth in the past year, and 69 per cent expressing concerns about “reputational risk”.
Finally, though more than a third of employers said they have already adopted a defined contribution master trust or made DC consolidation decisions, more than half (53 per cent) are not exploring DC consolidation and that they are unlikely to do so.
ACA chair Patrick Bloomfield said: “The pensions industry is creaking under the weight of too much legislative change being pushed through at the same time.
“A wide-scale capacity crunch is already happening and is set to get worse as dashboards, [guaranteed minimum pension] equalisation, simple statements, scam prevention and climate change are all competing for space, alongside fundamental changes to DB funding regulation and DC value for money.”
The pace of change “is pushing up costs and discouraging people from being trustees”, he continued.
“Unless steps are taken to manage the pressures being put on schemes, we risk killing off the UK’s traditional model of trusteeship. This would all but remove member representation in trustee boards, which was seen as such a positive step forwards 25 years ago, following the Maxwell scandal.
“We desperately need the government to focus on getting long-standing matters completed and implemented, before adding more things to the pensions to-do-list,” Bloomfield added.
Nigel Peaple, director of policy and advocacy at the Pensions and Lifetime Savings Association, said: “A certain amount of regulatory change is necessary, but a balance must be struck between the benefits it delivers in terms of better retirement outcomes, and the costs, which ultimately fall on individual savers and employers.
“To ensure we avoid over-regulation, it is important that the government does a proper cost-benefit assessment before making proposals and undertakes fully open and public consultation before proposing new requirements.”
