All Change (Again)

July/August 2010

This month heralded yet more announcements that could radically change workplace pensions. Pensions minister Steve Webb announced that the Consumer Prices Index (CPI) will be more widely used as the basis for calculating pensions increases rather than the traditional Retail Prices Index (RPI). All public sector schemes will adopt CPI – but private schemes will be left to decide whether to use CPI or RPI.

The debate will cause dilemmas for private sector trustees. CPI is typically lower than RPI. That means pensions will generally increase by a smaller percentage year-on-year if rises are calculated using CPI. On the surface, that could be great news for scheme funding. But trustees’ primary responsibility is to the scheme’s members and they will almost certainly suffer. Scheme rules will need to be examined, the effect on pensions already accrued by members considered, and the impact on a closed scheme where all members could see their benefits eroded will need to be calculated.

So, there’s another round of challenges ahead. But that’s nothing new. A comparison between our Engaged Investor Awards for 2010, and those that we ran last year show several new categories this year, reflecting the ever-changing nature of trusteeship. These include best de-risking strategy, a defined contribution-specific award for communications, and emphasis on innovation from consultants and investment managers. One other notable point about this year’s awards was its size. Last year 150 attendees joined us for lunch – this time we hosted nearly 250. And, for the first time, we hit 1,500 nominations for our online voting categories.

All this shows that, while life may be ever-changing for trustees, there is still a wealth of support and enthusiasm to ensure they can grow in their roles and respond to the constant changes being thrown their way. One more change that you might have noticed is a new face on this editor’s column. Its previous incumbent, Bob Campion, has not been able to escape that lightly – see his new [Trustee Perspective] column.