Member-nominated trustees: Making a difference

"There's nothing like a pandemic to keep pension trustees on their toes," Stuart Southall remarked in a September column. At the heart of the Punter Southall co-founder's words was his observation that MNTs are "the only people who can truly think like a member" for a scheme. No doubt, he said, this has served many well throughout the ups and downs that have marred 2020.

"The MNTs I work with are coping just fine," he wrote of trustees' experiences throughout Covid-19.

"Losing that completely may make the job harder for the remaining trustees, particularly at a complex and difficult time like we're in now."

At the start of last November, after seven months with coronavirus, PP asked its eligible readers to reflect on a simple question: Are you happy in your role as a trustee? Among the 92% of respondents who said ‘yes' were a range of comments espousing the fulfilment, sense of purpose, and general satisfaction the role provides.

For at least a third of all boards' trustees, those who function in a lay capacity, this is the only remuneration. To BESTrustees president Alan Pickering, MNTs represent "the salt of the earth", an irreplaceable and humanistic centre to a scheme's board. At a time where understanding and reassuring members has never been a more poignant and pressing priority, he says MNTs hold a crucial card for schemes' success in 2021.

A shifting world

Like all workers, trustees could not have foreseen that the majority of this year would require them to swap out face-to-face gatherings for online meetings while still achieving best outcomes for savers under growing regulatory pressure to not slip on standards.

While one trustee respondent said they could "become ‘Zoom-ed' out before long", many are pushing on with the challenges, which have already stretched over continuous months.

"It's always interesting being a trustee and it is satisfying contributing towards helping members," one said.

Another added: "As an MNT, I enjoy the role particularly when helping past colleagues and participating in meetings and subcommittee work."

"I enjoy making a difference," said one respondent. "Experience and common sense can support the aims of the pension scheme in the interest of the members."

"It's certainly interesting because it's always changing," stated another. "Also worrying, because of the increase in regulations."

Indeed, increased pressure from The Pensions Regulator (TPR) and stifling red tape have already seen many a talented trustee throw in the towel, Pickering warns.

MNTs are most at risk as technical requirements skyrocket for schemes of all types, sizes, and maturity stages.

Long-anticipated breakthroughs for professionalising trusteeship also peaked this year with the launch of two, rather than the expected one, professional trustee accreditation regimes - one each from the Association of Professional Pension Trustees and the Pensions Management Institute.

This has driven a further wedge between professional and lay trustees.

"It's the job of people like me, particularly when I'm chairing a trustee board, to persuade MNTs to hang on in there, even if the going gets tough," Pickering says. "Most of them are very altruistic and really want to put something back into society and therefore we must reward them for their commitment, rather than demonise them for their lack of technical skills.".

Despite some denunciation, the Association of Member Nominated Trustees (AMNT) co-chairman David Weeks says MNTs spend an approximate average of 12 years on boards. 

When the AMNT asked its members to document their working patterns, the majority reported more than double the expected annual time commitment.

"This could include keeping up to date with background reading on pensions generally, and then any sort of technical continuing professional development work," he says

"With the benefit of hindsight, we didn't ask them with high enough band options for hours; the biggest was ‘30 hours or more', which was a high expectation. Almost all of them spend 30 hours plus every year on their main trustee role alongside their regular job."

While MNTs are no doubt "highly altruistic" in Pickering's words, the commitment to the role has taken a sharp turn in light of the difficulties of 2020.

Moving into next year, both Pickering and Weeks expect recruitment will be on a downwards slide with a busy legislative horizon and the impending climax of Brexit impacts.

"One of the worst experiences of my working life has been to see really good pension professionals throwing in the towel because of the complex legislative and regulatory framework within which they have to operate," Pickering says. "If the professional consultant finds that web of legislation off-putting, just think about how it looks to the nature of the MNT. We have to make sure that there is less prescriptive and less intrusive legislation and regulation." 

He adds that boards risk losing sight of "the main event" while making sure they comply with regulators' "well-intentioned interventions".

"The main event is simply to pay the right amount to the right person at the right time," Pickering says. "It is very simple, and legislation should be equally simple".

The AMNT - which is comprised of around 66% defined benefit (DB) MNTs and 33% defined contribution (DC) MNTs - has found a particular concern for DB boards.

"Of course, DB schemes tend to be moving towards some sort of endgame, so that that's a hindrance to recruiting members - the thought that it's a limited role," Weeks notes.

"That may suit some, but most MNTs are looking to make a longstanding and valuable commitment."

Bright future

Despite some setbacks for MNTs and one of the strongest calls yet for an overhaul of the role last year, Pickering hopes "more of the same" will define the future of the role.

"An MNT needs to be bright, but not technical, say educated, particularly in today's world, where trustees are increasingly responsible for supervising subcontracted experts," he says.

"Many have the capacity for this role. We just need to provide them with enough pensions knowledge, so that they can then deploy the skills they bring from their day jobs for the interest of the pension scheme."

One of the key roles MNTs have played across many boards is pushing ESG and responsible investment issues to the fore, Weeks adds.

"MNTs have been very instrumental in pushing up that up the agenda, and it's what people want to invest in," he says.

"They're not specialists in investment, not specialists in the actuarial view, but they have a sort of broad perspective which allows them to bring these various factors into some sort of overall context which is not overwhelmed by their specific role on the board, in the way of a professional trustee."

MNTs will have a key role to play with the uncertain economic horizons ahead for 2021; a raft of changes is on the cards for trustees and boards through the Pensions Schemes Bill, heralding a new chapter in relations with TPR. Small DC schemes will face pressure to consolidate, while master trusts and superfunds are set to make big waves in narrowing the industry.

"Professional trustees who take the view that the MNTs are substandard and just turn up for meetings for lunch and don't really contribute very much have a very short-sighted view," Weeks says.

"But, this year does show that MNTs have their strong place. Naysayers must think if they can really afford to ditch these capable and efficient and deciduous individuals who have got a strong record of great work.

"I think a fair number of people in the across the industry do agree with their value, and so hopefully that will prevail," he concludes.

"The price of a lay trustee is beyond value", Pickering agrees. "Because their value is beyond calculation."