Governance with Impact
27 Oct 2021
“If you think you're too small to have an impact, try going to bed with a mosquito.”
- Anita Roddick
There is a lot of talk about impact these days. And not just having an impact, having a sufficient impact. This can be particularly concerning for employers of smaller DC schemes wishing to set up an Oversight or Governance Committee. Will their Committee really have sufficient impact? And how can this be achieved?
Employers often move to outsourced DC provision, a Group Personal Pension Plan or participating in a Master Trust, to get away from the reams of Governance required under the traditional trust-based arrangement. Yet an outsourced arrangement still needs oversight to ensure value is being obtained for both members and the scheme sponsor. A Governance Committee is the natural solution, but how can this be set-up efficiently to maximise effectiveness?
I’ve spent many a summer in Greece being significantly harassed by mosquitos. Small creatures that can have a lot of impact! Whilst the analogy can’t be stretched too far, there is no reason why Governance Committees of smaller DC schemes can’t be equally hard to ignore. Keeping focused on the core mission of a Governance Committee, which is to robustly oversee the provider and hold them to account, is the key to success.
No Governance Committee wants to be as irritating as a mosquito and whilst Committees don’t often in my experience extract blood, they do need to extract value! A constructive yet appropriately challenging relationship between Committee and provider is really added-value governance.
There is no reason why you can’t keep it simple but effective. Four meetings a year – highly engaged, focused Committee that has good training and advisory support to ensure they are totally up-to-date with the latest on the provider market. Meetings that have a closed session and then a session with the provider where scrutiny and searching questions (if not being as irritating as a mosquito) are the order of the day. Investment performance, administration quality, communication effectiveness, retirement support, proposition development – these are all key areas for scrutiny and comparison with the wider market.
The beauty of a Governance Committee is that there are no formal requirements so you can focus on what really matters and adds value. The biggest impact on member outcomes will be made by ensuring you extract value - quality pension provision for a decent cost. Sharp, focused quarterly meetings with the right people and quality market insight are the means to achieve this.
If you have any questions about anything covered in the blog, or about setting up a governance committee, please get in touch.