Trustee Barometer - January 2017
Adapting to an uncertain world
30 Jan 2017
Trusteeship is increasingly complex, particularly in the current economic and political landscape. Once simply stewards of members’ assets, now Trustees are required to be strategic risk managers.
Our third annual Trustee Barometer explores current trends in trusteeship and key challenges trustees say they are facing.
We see two key themes this year:
Deficits remain an unwelcome distraction – a longer-term focus is required
Only 1% of trustees told us they look at the probability of paying their members’ pensions as a key measure. When it comes to strategy, the industry still relies on volatile balance sheet deficits driven by ‘straight line’ discount rates. This is clouding how best to secure members’ pensions. The post-Brexit swing in deficits, from a record high of c£1trillion in August back to c£790bn in recent weeks, shows just how volatile deficits can be.
Inclusive, big picture leadership is needed
57% of trustees said having a fully integrated approach to funding remains one of their biggest challenges. Technically driven discussions focused on discount rates and deficits is drowning out efforts to embed a fully integrated approach. The real pension deficit, then, is about people. Inclusive, big picture strategic advice and leadership is needed to ensure sponsors, advisors and trustees feel engaged and focused on strategy, risk and metrics that matter – like paying members pensions. The difference in member outcomes for those schemes that have this versus those without could be vast.
We explore these themes, and more, in this year’s report. We hope you find it insightful and interesting and if you would like to discuss any of it in more detail please do get in touch.