The opdu Report - Issue 18, May 2005

Bulletin Board
Annual Meeting
Alan Herbert

	opdu’s 7th Annual Meeting, January 2005, attracted a very large gathering of approximately 200 and the guests enjoyed a reception afterwards at Freshfields Bruckhaus Deringer in the City. The Minister of State for Pensions, Malcolm Wicks MP, was the keynote speaker. The Minister gave an exceptionally open address and the audience was particularly appreciative of the time given to the question session and the manner in which Mr. Wicks addressed all the issues raised which substantially contributed to the value of the Meeting. The Minister also made time to join the reception giving guests the opportunity to discuss issues in person with him. Jonathan Bull had opened the Meeting and took the opportunity of announcing the launch of new opdu insurance cover for professional trustee liabilities following the winding-up of a pension scheme. The Meeting was also addressed by Alan Herbert, the Chairman of opdu's Advisory Council, who gave a positive report, as follows, on the progress made by opdu in the last year in developing the protection provided to occupational pension schemes. opdu's Annual Meetings provide an open forum for discussion on issues central to the aims of encouraging raising standards in the governance of occupational pension schemes. To register for details next January please contact Kaye Lambert at opdu or via this website.

It gives me much pleasure to present my report for the year:

Membership

The Membership now stands at 170 pension schemes. In fact over the last 18 months it has almost doubled. The schemes now insured through opdu hold assets in excess of £115bn. An increasing amount of new business is being introduced by pension consultants, lawyers and the major insurance brokers. The list of pending prospective members is very healthy.

We are delighted to welcome a number of new members here this evening. Many members are including the innovative Litigation Costs Extension in their cover. This is available to fund the legal costs and expenses incurred in seeking a declaration or directions from the courts as to how trustees should act in a particular set of circumstances. This is becoming particularly relevant in the litigious society in which pension schemes now operate.

Insurance Rates

Last year market rates for all classes of insurance rose sharply but have now begun to stabilise. However, the Professional and other Errors & Omissions liability sector suffered more than most. Various factors have contributed to this situation including significant claims payments; poor investment returns preventing insurers from subsiding underwriting losses from investment income; and a reduction in the number of insurance companies. Those insurers remaining in the Pension Trustee Liability sector have tended to reduce the scope of cover while at the same time increasing rates and excesses. Underwriters have also become increasingly concerned about scheme deficits and some insurers are excluding cover for sponsoring employers as a result.

However, I am pleased to report that the overall rates for opdu have remained competitive due to the size of its membership and the existing comprehensive cover provided has been retained.

We are grateful to ACE, opdu's underwriter, for confirming its commitment to opdu for the future.

Claims

Claims continue to be received which regrettably provide evidence of ongoing problems in administration. opdu continues to support the Raising Standards of Pensions Administration (RSPA) initiative and encourages trustees of pension schemes to do likewise. The rspa web site provides a mass of useful information to trustees concerned about administration issues. Trustees have the power to demand improved levels of service and should do so as part of their processes for managing risk.

Public Profile

opdu's public profile has remained high and a dialogue has been maintained with the DWP, The Pensions Ombudsman, Opra, Opas, professional Institutes, pension consultants, lawyers, brokers, and the press.

opdu is also pleased to have been able to assist the opra and DWP teams in developing some of the Codes of Practice.

The City and Eastern, West London and Southern Regional NAPF Group meetings are also regularly attended by the Managers as well as myself at the London Meetings. The Managers exhibited at the NAPF Annual Conference in Glasgow and the Pension Show in London as well as speaking at these events. In addition, Jonathan Bull has addressed various other forums and trustee meetings.

opdu has continued its sponsorship of Trustee Excellence in the Pensions Management Awards which was won this year by British Airways Pensions Scheme: an opdu member. Many congratulations to the Trustees of the scheme.

Web Development

We are continuing to improve the various interactive features on the site in view of the heavy demand – an average of 250 visits per day with much of the information being downloaded. I encourage you to visit the web Bulletin Board for the latest news and you can also find all the articles which have appeared in the previous issues of the opdu Report, together with membership information.

Trustee Risk Management

trm is a subsidiary of opdu and was set up to provide flexible support services to trustees in accordance with opdu's objectives of enhancing standards and encouraging best practice.

A series of regional seminars has been held in conjunction with the Department for Work and Pensions. These interactive seminars, which have been held at the offices of leading law firms, including our hosts, outline the new regulatory approach and the implications for trustees. Guidance is also given on how trustees can ensure the risks they face are effectively managed, together with the importance of information security. The seminars have received positive feedback and we are grateful to the DWP for its contribution and support.

A further series of smaller workshops for trustees is planned for this year to assist trustees in developing their own approach to pension scheme governance which will be particularly valuable in the light of the codes which are being issued under the new Pensions Act. Details are available on the opdu website here.

Wind-up

I am pleased to announce the launch of new insurance cover for trustee liabilities following the winding up of a pension fund. There is currently very limited cover available in the market and it is anticipated that there will be significant demand for such a product. It will be aimed at professional firms of independent trustees. Interest has already been high and it is anticipated that this new opdu product (which is also underwritten by ACE) will
play a significant role for the (regrettably) increasing number of schemes going into wind-up.

Ireland

I am also pleased to announce that opdu's unique combination of risk management and comprehensive insurance is now available in the Republic of Ireland.

The Pensions Archive

opdu has agreed to provide financial and other support to the Pensions Archive project the aim of which is to establish a national archive to hold documents which record the development of pension provision in this Country. It is proposed to establish a charitable body to run the Archive which it is intended to locate in the library of the City University. The Archive will be freely accessible to all persons who have an interest in the provision of retirement pensions and it is hoped that it will widen the knowledge and understanding of pensions by making information available to students, researchers, historians, politicians, civil servants, journalists and writers. An appeal will be launched for funds to finance the work and the running costs.

Freshfields

Finally I would like to express our thanks to the partners of Freshfields for hosting this event this evening. We are extremely grateful to them. I would also like to thank you all for attending.