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NAPF and ABI clash over pension scheme governance

Otto, ABi

The National Association of Pension Funds and the Association of British Insurers clashed over pension scheme governance when appearing before a the work and pensions select committee last week.

NAPF chief executive Joanne Segars repeated calls for fewer, large trust-based pensions while ABI director-general Otto Thoreson claimed employer contract-based schemes have improved governance in recent years.

Segars blasted contract-based schemes for creating a “dysfunctional” market and called for a radical overhaul of schemes rather than more regulation.

She said: “The best way to tackle the market is to move towards a more rational pension structure with fewer, large trust-base schemes.

“By doing that, and this is something the regulator has recognised, you get that good quality of governance that Nest has and other large trust-based players have. We can put a sticking plaster over the current market or move towards something that is much more ambitious, more rational and will deliver better outcomes.’

But Thoreson hit back by claiming trust-based schemes do not have the same “regulatory discipline” as contract-based schemes.

He said: “The regulators have no appetite to have on regime that covers the whole territory. In the contract based world we have a regulated regime that insists on the top people in an organisation taking responsibility for the activities of their firm.

The management information that goes to board levels are now as much about customer experience and evidence on how well it is working as it is about financial performance. It is strong and effective.”

Affluent Financial Planning managing director Carl Melvin says: “Both sides make valid points but the cost of schemes will be the greatest driver for companies rather than good governance, which will come down in favour of contract based schemes.”

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