British amateurism

British amateurism: member nominated trustees

It’s curious that was once anathema is now much prized. The current/former parliamentary under-secretary of state for pensions is reported to have called for the abandonment of member-nominated trustees in exchange for wider appointment of professional trustees. (Alex Janiaud, Opperman moots abolishing member-nominated trustees, Pensions Expert, 5 September 2022 (in a lang-cat podcast)). It may have been just an idle thought but, if not, it reflects a profound misunderstanding of what trustees are about, and it certainly is not based on outcomes-based thinking. It also suggests some more rules are on the way, despite the new Prime Minister’s determination to reduce the number of regulations in the country generally.

MNTs came into operation after a major scandal (the Maxwell Affair in the 1990s); they weren’t actually an answer to a problem, and they reflected mainland Europe’s dual corporate structure following pressure from trade unions (remember them?). In fact even though nowadays MNTs are hard to find, they are not universally wonderful, and their appointment can involve a byzantine process, they have often added surprising value. They are the ones who if they are awake speak truth to power – or at least ask the awkward questions. The report quotes the minister as saying:

“We need professional trustees. There should be wholesale reform of the trustee situation,” he said. The minister added that getting rid of MNTs is “part of the conversation”, and that “the collection of trustees has got to have a professional trustee”. “You can blame me, because myself and DWP have made the life of a trustee much more complicated,” he said, pointing to new obligations on environmental, social and governance reporting. “We need to make the position of a trustee a bigger and better thing. These are professional trustees who are going to be handling very large amounts of money,” Opperman added, again referencing the Australian pensions landscape.

He might have added that untrained ministers handle even more money and that the DWP track record for example is not untainted. If anything needs professionalization it is rulemakers and lawmakers; we might get better and less regulation if MPs, ministers, regulators and peers felt obliged to get some basic training (like professional trustees) in what they do before they tell the rest of us how to behave. But trustees are professional amateurs, like parish councillors, who hire experts like lawyers and actuaries when they need them. Rather like MPs and ministers. And rather the better for it.

Prize for the longest and wrongest law title 2022

Recently we have been blessed with the coming into force of the Occupational Pension Schemes (Climate Change Governance and Reporting) (Amendment, Modification and Transitional Provision) Regulations (Northern Ireland) 2022 SR 2022/0209. Amongst other things the regs

????????introduce a requirement that trustees must select and calculate a portfolio alignment metric for the assets of their scheme. A portfolio alignment metric is a metric which gives the alignment of the scheme’s assets with the goal of limiting the increase in the global average temperature to 1.°C above pre-industrial levels

????????require that trustees include specified information about their portfolio alignment metric in the report they are required to produce and publish.

Use of metrics

Are the regs sensible? A famous paper over 60 years ago (V F Ridgway, Dysfunctional Consequences of Performance Measurements, [1956] 1(2) Administrative Science Quarterly 240-247) made the case that we should be careful when using quantitative measures:

“Quantitative measures of performance are tools, and are undoubtedly useful. But research indicates that indiscriminate use and undue confidence and reliance in them result from insufficient knowledge of the full effects and consequences. Judicious use of a tool requires awareness of possible side effects and reactions. Otherwise, indiscriminate use may result in side effects and reactions outweighing the benefits (…) The cure is sometimes worse than the disease.”

A journalist Simon Caulkin noted in a summary: “What gets measured gets managed—even when it’s pointless to measure and manage it, and even if it harms the purpose of the organisation to do so.”

Pensions and culture

(1) Pensions and grime

Grime artist and TV cook, Big Zuu, has produced a song and accompanying video calling on people to ‘Pay Your Pension Some Attention’, as part of a wider campaign.

The song, which is part of a campaign launched by Pension Attention, encourages listeners to ask questions, make connections and think about future intentions with regards to pensions.

It directs people to Pension Attention’s website for basic information on how pensions work, including how employers are able to boost pension contributions (https://pensionattention.co.uk/). It is a cross between Ali G and the BA safety video and it is hard to find a metric to determine whether the effort was worth it.

(2) Pensions, films and teachers

The Browning Version is currently being shown on free-to-air television. For those of us who have forgotten what it is about, it concerns the forced retirement of a classics schoolmaster at a private school, an affair his unsatisfied wife is having with a colleague – and the fact that the school have decided not to award him a pension on the grounds of ill-health. It has a certain resonance with another school-based film Goodbye Mr Chips, where Mr Chipping was by contrast offered a pension to retire. Both of the fictional schoolteachers seemed to have elements of autism in their characters, perhaps common in actuaries and classics teachers. The films might comfort us with the thought that however dysfunctional our present workplace-based pension systems are, they are better now than they were – and that decent employer-backed pension arrangements can save a lot of anguish. They might also teach us that there’s not much future in the classics, despite the former prime minister’s farewell speech.