The opdu Report - Issue 20, June 2006

Bulletin Board
Annual Meeting

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

I am very pleased to record that opdu gained 40 new members last year and the Membership went through the 200 mark. It now stands at 203 registered members although there are more individual schemes covered within this membership. The schemes insured through opdu hold assets valued in the region of £115bn. which represents approximately one-sixth of total pension fund assets in the UK, excluding local authority schemes which do not require insurance. The potential new member applications remain positive although the lead-in periods for joining can sometimes be protracted due to the decision making processes of trustees and sponsoring employers. During this period the scheme and trustees are at risk if they do not have alternative arrangements in place.

Members of opdu are encouraged to view their membership as a long-term relationship with an organisation which is member focused but renewals are dealt with on an annual basis against competing insurers.

The increase in membership that has been achieved no doubt is a reflection of the challenging times in which trustees of pension schemes continue to find themselves carrying out their trusteeship.

When preparing this review I looked back at what I said in 2002 and it ran as follows:

“opdu was launched in April 1997 to give support and protection to those faced with running occupational pension schemes in the new statutory environment introduced by the Pensions Act. Five years later trustees of occupational pension schemes find themselves operating in a very difficult climate with many other challenges now facing them which if not handled in an appropriate way can lead to potential disputes and claims.”

Three years later this difficult climate still prevails with trustees having to deal with significant scheme deficits in conjunction with sponsoring employers as well as coming to terms with operating within a further statutory environment laid down by the Pensions Act 2004.  Trustees are also having to familiarise themselves with the new Codes of Practice which they will need to work to.  It is therefore not surprising that an increasing number of scheme trustees and their sponsoring employers are looking at the support and protection which can be offered by opdu membership if things should go wrong and mistakes are made. There are now several thousand trustees of member schemes who enjoy the support offered by the Advisory service and the protection of the opdu policy even though a number of them have retired from their trusteeships.

One of opdu’s main objectives has been to encourage the raising of standards generally and it therefore very much supports the raising of standards in pensions management and administration for which trustees are overall responsible.  The codifying of the  knowledge and understanding that trustees will be expected to have should also, over the longer term, result in the raising of standards of trusteeship which will be beneficial for the security of pension scheme members benefits.

I would now like to turn to some of opdu’s activities during the year.

ACE (Europe) as the underwriter has continued to give its support and has shown its ongoing commitment to opdu during the year.  We are most grateful to them for this.

As I reported last year, claims continue to be received which regrettably provide evidence of ongoing problems in administration. opdu continues to support  the Raising Standards of Pensions Administration 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.

opdu exhibited successfully at the NAPF’s Annual Conference in Manchester in May and the Professional Pensions Show at the Excel Centre in Docklands in November.  At the latter event, Jonathan Bull and I took part in a panel discussion with the DWP which was chaired by the Chief Executive of the Pensions Advisory Service.

opdu has maintained its high profile within the pension’s community with close links to the Department for Work and Pensions, The Pensions Regulator, The Pensions Ombudsman, The Pensions Advisory Service, industry bodies and the press. 

The opdu Report continues to receive commendations from its readership and we are delighted that it is filling a role of bringing to the attention of trustees and others a wide selection of articles which its readers find useful.  It also aims to bring to the attention of trustees new ideas and services from a range of advisers and providers which should assist them in carrying out their duties. A number of new members have been attracted to opdu membership through its publication.  The Reports are mailed in hard copy format and have a circulation of 6,000 copies. They are also available in the reports sections of this website.

The website continues to be very popular.
We are continuing to improve the various interactive features on the site in view of the heavy demand - an average of 300 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.
At the invitation of the Pensions Minister, opdu nominated three members for a Trustee Panel to work with the Government on trustee related issues.  I am very pleased that Peter Askins Head of Policy on Pension Fund Trustees & Scheme Administration at the Department for Work and Pensions who is closely involved with the Panel will be addressing us this evening.  The TUC, the National Association of Pension Funds and the Pensions Management Institute were the other bodies chosen by the Government to make nominations. I am delighted that our three nominees, Andrew Morris-Richardson of Abacus Lighting, Steve Bradbury of J Sainsbury and Dennis Buckley of SAUL Trustee Company are present here this evening.

During 2005 Trustee Risk Management (trm), which 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,  held a very successful series of interactive trustee workshops. They were aimed at assisting “trustee knowledge and understanding” in the new regulatory and legislative environment. The programme included speakers from The Pensions Regulator, Sacker & Partners, ITM Ltd, Standard & Poor’s and EPIC Investment Consulting.  A further series of workshops are being planned for this year and details are in the leaflets on your seats. Arrangements can be made for scheme specific workshops with individual boards of trustees.

opdu has also undertaken a major initiative to promote the raising of trustee awareness on how to tackle risks to which pension schemes are exposed in a cost-effective manner.  This has been done by the distribution to pension schemes of a complimentary risk management model on a CD for trustees.  The initiative has received wide media coverage as well as recognition by the DWP and The Pensions Regulator.

Besides these initiatives covering the present and the future opdu has also been supporting the Pensions Archive project which seeks to bring together documents and papers recording the history and development of occupational pension  provision in this country.  The Pensions Archive Trust has been incorporated as a charitable company limited by guarantee to administer the Archive.  Alastair Ross Goobey has become its first President and gave the inaugural Ross Goobey Lecture at Cass Business School at the end of October at which an appeal for funds was launched. A further lecture is being hosted by Merrill Lynch on 31 January when Michael Pomery President of the Institute of Actuaries will speak on the theme that in pensions lessons can be learned from the past. If you would like to attend do let me know. You will also find details of the project and the appeal on your seat and if you are able to give help or support in some way do contact me.

As opdu approaches the ninth anniversary of its establishment it is confident that it will be able to play an increasingly important role in supporting trustees and others involved in the running of occupational pension schemes in the changing environment with which they are faced.

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.