‘Incompetent’ trustees put pension provision at risk

Almost half of employers operating defined contribution pensions believe their scheme’s trustees are incompetent, research has shown.

More than one in three respondents to a survey by asset management firm SEI reported having difficulty finding trustees to run pension schemes.

The survey claimed these difficulties in finding competent trustees were driving employers to contract out pension provision.

Trustees are nominated to control the assets of a pension scheme and look after the interests of its members.

Patrick Disney, head of European institutional business at SEI, said: “This research paints a gloomy picture for the current outlook of pension provision.

“There is little doubt that a trust-based scheme provides better oversight and guidance for employees, yet the struggle to recruit and retain trustees, especially in the light of changing legislation, becomes increasingly onerous.”

SEI commissioned Continental Research to interview 100 executives responsible for defined contribution schemes in the UK with assets from £10m to £500m.

Meanwhile, the Pensions Bill had its third and final reading in the House of Commons last week, and now passes to the House of Lords. The Bill proposes a ‘personal accounts’ system, where employee contributions are matched by employer payments and tax breaks.

David Yeandle, deputy director of employment policy at manufacturers’ body the EEF, broadly backed the Bill. But he warned that giving “carte blanche” to the secretary of state to increase contributions without extra legislation could undermine confidence in the system.

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