Pensions projects in the new normal
Pensions projects in the new normal
Sally Minchella, Trustee Director at LawDeb, takes a look at the unprecedented circumstances and unforeseen challenges that pension scheme trustees have had to face this year as well as the subsequent deferral of various projects in early lockdown - column published on mallowstreet.com 30/11/20
This year has brought pension scheme trustees unprecedented circumstances and unforeseen challenges to navigate, and with that came deferral of various projects in early lockdown.
With another lockdown upon us and virtual meetings looking like they remain the norm as we head into 2021, I find myself wondering what my Law Debenture colleagues have been seeing on their schemes and what lessons have been learnt as we adapt to this ‘new normal’; in any case it was a good opportunity for a virtual catch-up with them…
ESG-related investment reviews
While there are a minority of schemes who have had to deal with the first wave of Implementation Statements, in our experience not many have made meaningful progress on integrating ESG and/or climate change risk into their investment strategy during 2020, where they were not already giving it serious consideration.
On the other hand, my colleague Samantha Pitt noted: “I’ve completed various ESG reviews this year and undertaken investment manager beauty parades remotely - it’s worked better than pre-lockdown as we had direct access to the fund managers in the US via video call who may not necessarily have travelled to the UK before to present to a pension scheme.”
Many schemes were obviously reluctant to review or change key service providers during early lockdown. This was especially the case with administrators, where home working was typically a more significant change to prior working practice, and the key priority for trustees was ensuring that members continued to be paid their benefits and other key services could be delivered
However, we’ve more recently seen administrator re-tenders proceeding. Administrators are generally well geared up for this remote tender process - virtual site visits are now becoming commonplace, with portal capabilities and admin systems being demonstrated via screen sharing on video calls.
My colleague George Norval from Pegasus said that “lockdown has its benefits as the relevant meetings with potential service providers can be scheduled to be shorter and more frequent as required. We would suggest closer scrutiny of cyber security and data controls, especially in the context of back office work often being undertaken outside the UK and having only recently and temporarily moved to working from home. It’s also good to understand how physical post is dealt with and what online member servicing capabilities the administrator has. A great transition manager is also more important than ever before.”
Other material projects
In our experience, master-trust transitions, fiduciary manager selection, buy-ins and buyouts are all proceeding (and in some cases have been able to benefit from advantageous pricing in the risk settlement market). Trustees are adopting a robust and cautious approach to project management across a broad range of ongoing projects, with those initially postponed largely now back on the gas.
Schemes have adapted well
We now know that most of us are likely to be working predominantly from home until at least April next year. That means that it isn’t just a case of putting things on hold until we get ‘back to normal’. And in any case, there may be a new normal that combines home and office working in a way that we never did before.
Schemes have adapted well and have become more confident in working remotely. It is reasonable for trustees to give careful consideration to any projects still ‘on hold’ and potentially progressing new projects, ensuring that the important issues, as well as the urgent ones, get due attention in the business plan for 2021.