Two years into his role as CEO of Independent Governance Group (IGG), indie rock-loving Mancunian Andrew Bradshaw has a vision of a new form of professional trustee firm.
For Bradshaw it is about expanding the range of services offered by trustees and acknowledging the responsibilities that come with the massive amounts of assets – over £240bn at the last count – for which they have oversight.
“It’s a case of becoming a one stop shop and also upskilling the trustee role, increasing professionalism as we go,” he says. “We are effectively taking more ownership of the trustee role – not looking at the world as it was 20 years ago where the trustees had all the responsibility for everything and outsourced it. Instead we are going to recruit people into IGG who can discharge may of those duties.”
Bradshaw has been on the trustee side for over a decade, joining Ross Trustees after a successful career as a partner at Sackers. Ross Trustees, was founded by Steven Ross at the beginning of the last decade. Since then, private equity backing facilitated the merger of Ross Trustees and ITS in February 2023 to form IGG.
Its trajectory reflects a trend in the sector towards bigger professional trustees across a handful of firms.
Regulatory crosshairs
This trend means there are now around 10 professional trustee firms governing over £1 trillion of assets under management, a fact that has not gone unnoticed by The Pensions Regulator. Does Bradshaw welcome the increased scrutiny and potential for regulation of professional trustees?
“It has to be welcomed and there’s lots of data that we can share with the regulatory authorities that will be helpful. I chaired an industry group back in 2017 that introduced professional standards for trustees for the first time,” says Bradshaw.
He was involved in setting a voluntary professional standards and ethics framework at the Association of Professional Pension Trustees (APPT) and welcomes further oversight now, believing it will drive professionalism in the industry. “We were always slightly frustrated that the regulator never went a bit further with the standards by saying they expect all firms to put in place these policies.”
Expanded roles
Bradshaw sees opportunities and obligations in how trustees conduct themselves, translating into an organisation with multi-disciplinary capabilities. “Sponsors don’t just want us to turn up and chair a meeting. They want us to take and record the minutes, do project management and manage advisers, and keep an eye on investment costs, performance, and communicate with members,” he says.
As well as facilitating the formation of the firm, private equity funding has enabled IGG to bring the Like Minds communications business into the group, as well as IC Select, based in Edinburgh who do fiduciary manager oversight.
The firm’s graduate recruitment strategy supports a desire to have expertise from all age groups within the organisation – the firm’s youngest trustee is 30 years old.
“It’s really important to have younger trustees on boards because they have a very different perspective to older ones. You might think a company is doing the right thing to force people to contribute more of their salary into a DC scheme. But when you ask some people in their 20s, they may say, look, it’s a lovely idea, but we need the money now.”
Tech tool
IGG is also upping its game in terms of benchmarking how schemes are performing through its IGGiq technology platform, a new initiative which crunches data from the firm’s £250bn-worth of schemes across performance, charges and risk. This will allow the firm to check the homework of the investment consultants, asset managers and other third party providers of services they use.
“A fundamental point here is that this is not the data of third party providers. It is our data as trustees – we own it.
“The IGGiq tool is also really powerful for things like ESG. This is a big issue for the industry that is really frustrating for trustees because nobody can every give you an answer on what’s happening with your investments, and whether you are meeting your objectives,” says Bradshaw.
The tool won’t compete with what investment consultants are doing but is designed to give trustees the opportunity to keep an eye on discrepancies that emerge. It will be rolled out to other trustee firms.
“Other trustee firms are interested in it, and I want to democratise it – it should be something that all trustees have, to give you your own view in addition to what advisers are telling you,” he says.
Surplus requirements
With DB pensions in vastly different territory since the generational turnaround in interest rates, what is in his in-tray? “Our typical client is a blue chip corporate sponsor who has a DB pension scheme for probably the last 50 or 60 years. They are looking at it as a liability, where it has got a deficit, or increasingly, as an asset because it has a surplus,” he says.
“There was a groupthink for a long time that most people bought into, which was if you can get a scheme into an insurance company, it’s the right thing to do.
“The difference now is we will tell sponsors they’ve got an asset with a surplus they can use. So what is a fair distribution of that surplus? The corporate may say, well, I’d like some of that back because I’ve put in a lot of money for the last 15 years. That’s a fair position. And it’s a fair position for the trustees to say, I’d like to get some of that to put aside for future discretionary pension increases, or to subsidise the DC. So do you use the asset or give it to an insurance company and the 20 per cent surplus goes into the premium?”
Bradshaw recently pressed the point in an open letter to pensions minister Torsen Bell MP, writing: “We would urge the Government to focus on reforms to the rules regarding scheme surplus to incentivise greater levels of investment in UK businesses, which can be achieved within a shorter timeframe than proposed DC measures. A reform of the rules would provide immediate opportunity for surpluses to be used in a more productive way for scheme members and UK sponsors.”
Risk on?
So does Bradshaw see an irony in that DC pensions have been moving away from targeting secure investments such as annuities that are restricted by Solvency II investment requirements, DB schemes have been going in the other direction?
“Corporates have had a tough time with regulation and deficits, which scarred quite a lot of companies.
But if you take a deep breath and look at giving away an asset, potentially the biggest asset you’ve got as a corporate, think through what that might mean. Think through what it might mean if your competitor doesn’t transfer to an insurance company and it can suddenly do 15 per cent DC contributions for its workforce whereas you can’t,” says Bradshaw. “Let’s see whether we get an incentive to use a surplus. But there’s not need to rush, so don’t do anything rash.”
DC role
Bradshaw is not himself a DC specialist, although the firm does have master trust appointments running into double figures. But IGG is broadly supportive of the Government’s drive to promote private capital investments within DC schemes, provided there is no clash with fiduciary duty. In his letter to the minister, Bradshaw said: “We welcome the Government’s continued interest in the material role pensions capital can play in preparing people for their retirement by delivering value to savers, while simultaneously driving investment in the UK economy. The golden thread which links the two is trustees’ fiduciary duty to the beneficiaries of the schemes we govern. Because of this, we support all measures that provide savers with the opportunity to grow larger, more secure pension pots for their retirement through high quality investments.”
Manchester life
A family man with two teenage daughters, Bradshaw’s non-work life reflects his Manchester roots. He has two main passions – he’s an indie/indie dance fan who grew up on New Order and The Stone Roses, and goes to a lot of live gigs. And his other great love? “I’m a football fan – a long suffering Man U fan. But I can’t complain because we had 25 great years.”
