Most industry participants agree that education has to be the foremost concern. “A lot of boards until recently have been made up of gifted amateurs rather than professionals. There is an expectation that this will change,” says Elizabeth Renshaw-Ames, a worldwide partner at Mercer Investment Consulting.
She points out that in the UK the Pensions Regulator is requiring trustees to reach a certain level of knowledge by April 2006. “Myners was the first
person to argue that pension funds need to be run more like a business with the applications of these governance principles. They are recognised as best practice principles and more informed boards have adopted them in a wider reaching way,” she says.
The Universities Superannuation Scheme, the £20bn (e29.6bn) fund, has been increasing its education efforts for some time. “Clearly, what we’ve been seeing recently is a greater interest in things like trustee training,” says Terry Raby, internal audit manager. “That is going to have an impact. We want to be able to show that individual trustees have attended certain training courses, participated in trustee forums, etc. It may not be happening to a wide extent now, but everyone is prepared for it, and it will happen soon.”
The fund hired a communications manager two years ago, and has been holding more regional meetings, as well as meetings with universities’ internal associations. “In our case, because we are a very large scheme, we have been able to have the specialists that we need. We have put resources into this, so it’s not something that is an overwhelming problem for us, but I can imagine that it would be for smaller pension funds,” Raby says.
But large or small, pension fund trustees will have very little to say in the matter. It is not, suggests Watson Wyatt’s Carter, a question of changing rules, so much as changing complexity. “Historically, trustee bodies have been arranged to include a mix of member-nominated trustees and employee trustees. This model is now under stress, mainly because the complexity of the job has risen exponentially and also because the regulator is introducing funding requirements that introduce potentially divisive dynamics into the company/trustee relationship.”
Others say that is no excuse. “It is their responsibility. They are managing your money and mine. It’s just a question of commonsense; they have to move with the times,” argues one industry participant, who points out that changes have been in the pipeline for some time, and that trustees should have had the foresight to realise that they needed to be better educated in their roles.
“Trustees have got themselves in a very tight corner, and a lot of it is their own doing,” he says.

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