Legal & General has moved to close the perceived governance gap between trust and contract-based pensions by launching a “trustee style” committee to oversee the provider’s contract-based schemes.
The issue of scheme governance was brought to the fore by the Work and Pensions select committee recently, which urged the Government to help employers set up “governance committees” for contract-based pension schemes in response to concerns about a lack of protection for members.
Labour shadow pensions minister Gregg McClymont has also called for independent trustees to be installed in contract-based pension arrangements.
In response to this, L&G has launched a new governance structure, called independent governance oversight, designed to look after the interests of contract-based scheme members.
L&G says the IGO will mirror the governance structure of L&G’s WorkSave master trust and will initially focus on default funds. It says the IGO will be available to new and existing schemes at no extra cost.
The governance committee will be chaired by Paul Trickett, the former head of global portfolio solutions at Goldman Sachs Asset Management.
Other committee members include Pitmans Trustees, an independent trustee firm, L&G managing director of workplace savings Tony Filbin and L&G head of scheme restructres Paul McBride.
All members of the IGO are paid by Legal & General.
Trickett says: “The current contrast in governance between trust-based schemes and contract schemes has been well publicised in recent times.
“Many contract schemes work with very high levels of governance, with the sponsor, their advisers and their chosen provider collaborating to the benefit of the members.
“But many others do not operate with such high standards and some schemes will be wholly reliant on the provider.
“To help bridge this governance gap, and to avoid the potential conflicts inherent in a system whereby only the provider is responsible, Legal & General is implementing a new governance structure called ‘independent governance oversight’.
“It is designed to work both with schemes’ own governance committees and to take sole responsibility where no other governance exists.”