Bulletin Board

opdu celebrates its 5th birthday
Alan Herbert

As the Queen celebrates her Golden Jubilee this year, opdu celebrates the fifth anniversary of its launch. It was on Thursday 3rd April 1997, just three days before the main provisions of the Pensions Act came into force, that opdu was introduced to the pensions world. It was an uncertain time for Trustees and those involved in running occupational pension schemes. They had to adjust to a new statutory environment where statutory powers were granted to Trustees and statutory responsibilities placed upon them: there was a sharpening of the relationship between the Trustees and the sponsoring employer; and Member Nominated Trustees appointed through a statutory process appeared on the scene for the first time.

Trustees knew that from 6th April 1997 they would be operating under the watchful eye of a new authority, the Occupational Pensions Regulatory Authority. A date, which those involved with pensions, will not forget. They also knew, amongst other things, they would be having to set up a resolution of disputes procedure for their schemes.

opdu was conceived to provide support and insurance cover for trustees and others handling the day-to-day running of occupational pension schemes in the post Pensions Act environment. It was particularly felt there was a need for such a service so that Employers could offer some comfort and reassurance to those members putting themselves forward to act as Member Nominated Trustees in this new regulatory environment. A great deal of comment was made at the time, warning them of the responsibilities they would be taking on and in some cases suggesting that the risks were too great to become involved.

Since then, not only have Trustees had to cope with familiarising themselves with the practical workings of the many aspects of the Act but those responsible for defined benefit schemes have also had to cope with the Minimum funding requirement introduced by the Act.

On top of this the Government introduced the need for Trustees to address the issue of Socially Responsible Investment. This has been closely followed by the Myners Report with its ten principles and the Government’s proposals for monitoring compliance after two years commencing in March 2003. Another anniversary date to remember !

But how has opdu fared over its first five years. It has certainly established itself over this period not only amongst Trustees, pensions professionals and Employers but also amongst the regulatory and representative bodies of the pensions world. It has grown its membership from zero to seventy-eight member schemes covering the whole range of schemes from the small, medium to the very large. Through its elected Advisory Council the representatives of the member schemes have shaped the cover provided under the policy and have encouraged the provision of new and wider cover. More importantly it has supported and assisted member schemes when they have experienced problems and organised the settling of claims - the largest settlement to date exceeding £500,000. Therefore, opdu affords a valuable external resource for protecting assets which is ultimately of benefit to pension fund members.

Looking back over the five years there have been a number of significant land marks in the development of opdu. In December 1999 it arranged for the period of retirement cover for individuals to be increased to 12 years. At the same time an extension was introduced to provide cover to meet the costs in seeking directions or a declaration from the courts.

In line with its objectives of managing risks and raising standards in running pension schemes, opdu has been involved with and supported initiatives in these areas. May 2000 saw a Trustee Risk Management Service introduced for insured members of opdu and for non-members. In September 2001 it sponsored a discussion forum on “Pensions Administration – Meeting Trustees Expectations” as part of an initiative to raise pension administration standards. The forum was attended by over 150 pension professionals and opdu is pleased to see the progress which is being made with this initiative.

The Annual Meeting and Reception of opdu has become a focal point in the pensions world calendar. Since inception they have been addressed by leading figures from the world of pensions and attended each year by some 100 delegates.

In its first five years opdu has certainly made its mark within the occupational pensions movement in the United Kingdom. I am sure when it comes to celebrate its Golden Jubilee in 2047 it will have a great story to tell on how it has supported Trustees during a period of great change over the previous fifty years !