The past few months have ushered in a whirlwind of proposals aimed at energising the pensions market. There’s real momentum building: a data-first future looms, promising greater member value and a frictionless experience inspired by Open Banking. I’m excited about the possibilities.
But amid the buzz, trustees, those who know their schemes and members best, are in danger of becoming spectators in the very system they help uphold. It feels, at times, like they’ve lost their voice. Much like the Little Mermaid, they see the future unfolding – be it greater consolidation, no ongoing employer obligations and the confusion around government ‘reserve’ powers and decumulation challenges – but can only watch silently as others shape it.
To ignore the experience, insight and influence of over 2,300 trustees, who understand their members’ needs and are charged with executing the changes envisioned in the Pensions Bill, is a strategic misstep.
Policymakers understandably turn to those managing capital to inform their proposals. But in pensions, that lens risks becoming too narrow. Trustees hold fiduciary responsibility. Their duty is to act in the best interests of members. Without their input, even policies designed with the best intentions can fall flat in execution. Trustees have a key role to play in helping to translate a regulatory framework into workable policy. The devil is often in the detail and trustees are well placed to identify potential problems, be it practical barriers, unintended consequences or the behavioural responses of members, which can easily be overlooked in a closed-loop of policymaking.
Without the trustees’ voice we risk creating frameworks that struggle in the real world. Let’s consider a few examples.
Reserve powers have been debated by the market and politicians. Let’s look at what these might mean to trustees. Currently, under law, trustees are responsible for investment decisions. If there is a reserve power to force an investment into an asset class that was agreed upon voluntarily what does this mean for fiduciary powers and the risks that this brings to trustees? Who is ultimately liable if the investment does not do well?
Another potental risk to members is this push for consolidation if value is not met. We all want to create long-term value for members, ensuring there is focused resources and budget to operate the scheme is essential, but we should not discount the value offered by employers and severing that relationship through consolidation may create other issues going forward..
Once in a master trust, DC members are largely immobile unless their employer changes scheme. So as mega schemes are created, who is looking after specific types of members? We know this is an issue in other markets. Employers have no obligation to review schemes, or even the value they are deriving from the contributions they are making. Without ongoing responsibilities for employers to oversee their outsourced pension solution for members we may reintroduce a ‘set and forget’ culture.
Side-stepping trustee input doesn’t just compromise policy effectiveness, it introduces extended timelines, cost and risk. Schemes may be forced to rely more heavily on third-party advice to navigate increasingly complex regulation. Employers could inherit residual liabilities without the clarity or control to manage them. Worse still, poor implementation could erode member confidence and stall the innovation the system seeks to promote.
The solution? Involve trustees in the conversation. These are the people on the ground, charged with turning high-level proposals into operational reality. Including them at the outset is not only efficient, it ensures reforms are practical, member-focused, and more likely to succeed.
Every day, I speak with trustees and scheme leaders. They are informed, committed and realistic about the need for evolution. But all too often, change is happening to them — not with them.
Trustees offer a unique lens: independent, accountable, member-focused and pragmatic. Their insights can improve outcomes, accelerate reform, and help the system avoid costly missteps. Policymakers should broaden their engagement and look beyond asset managers, insurers and master trust executives. Sit down with trustees, hear their concerns and allow their perspective to help shape what comes next.
