Governance

Governance

Achievement of best practice

In today's environment where effective risk management controls and procedures are seen as key to well run pension schemes, good governance must be high on the agenda for every trustee body.

However, good governance in regard to occupational pension schemes has never been clearly defined.  So what does good governance look like?  How can trustees be sure that their scheme is being well governed?  How do you demonstrate good governance for a diverse audience comprising the members, advisers (who are all whistleblowers), the scheme auditor and the Pensions Regulator?  How can you be sure that any independent assessment of your existing procedures and controls is truly independent and objective?

Based on its extensive expertise in regard to the provision of trusteeship, secretariat, trustee training and risk management services, Pi has established a formal governance service which can help trustees in all of these areas, or in regard to any specific area of concern.  And as a truly independent consultancy, which is free from all issues of self interest, clients can be confident that such a review will be impartial and objective.

Project Example - Nectar

This client needed to address the framework within which the trustee board operated and bring this in line with good practice within the industry. One area of concern was the lack of any formal risk review. The trustees, being under considerable pressure with other aspects of their role, called on Pi Consulting.  Pi worked with the Secretary to the Trustees in drafting an initial list of risks, detailing those risks along with the current position and controls.  This draft was discussed at a trustee meeting and extracts from the relevant areas were passed to scheme advisers for their comments and agreement.  Once agreed, the risks were then graded for impact and probability.

The process highlighted several issues including:

• lack of certainty on where original scheme documents were retained
• lack of evidence of regular reviews of factors by the scheme actuary
• the need for more basic understanding of standard administration processes.

These issues are now periodically reviewed and actions assigned accordingly.

In other cases the risks have been detailed through a workshop with the trustees. This ensures that priorities are tailored to the client needs rather than adopting a generic approach.  An annual review of risk then becomes a part of the client's business plan.