Subjects:

Pensions Law

Contents:

1. THE BASICS

Being a trustee is much more complicated than it looks

trustees versus the sponsor

can you really wear two hats?

know your members

appointing trustees

- the members' voice

making up the board

the money man

the problem for bosses

who is at the meeting?

starting out

a word on liability

hang on a minute...

communicating

2. TRUSTEES OF WHAT EXACTLY?

The holiday of a lifetime

apples, pears and deficits

a very big hole indeed

back to the beginning

shopping for a pension

asking the right questions

when a promise is broken

the end of the road for DB

some thoughts on DC

reasons to be cheerful

the consequences of closure

what to do about stress?

twin track trustees

3. OK, SO THERE ARE SOME BORING BITS

The trustee as walking encyclopedia

trust in the Trust Deed

reading lessons

the key points

the power of minutes

put it on the record

back to rules and regulations

4. LEARNING TO TAKE ADVICE

An end to deference

baffled by gobbledygook

the science of the actuary

making models

a mixed performance

where it all began

the cult of equity

how much risk, exactly?

new thinking on liabilities

old thinking on liabilities

actuarial asides

a moving target

new thinking about longevity

and another thing

5. MAKING UP THE NUMBERS

Consulting your consultants

a monitoring service

garbage in, garbage out

the shape of things to come

the big picture

all in for alm

the devil in the details

marks out of ten?

assumptions, assumptions

inside the black box

determinedly deterministic

ups and downs

rubber stamp time

real numbers wanted

almost there

and finally...

6 . NOW IT GETS INTERESTING

The new regime

guiding principles

not all roses?

the banking paradigm

the problem of prudence

talking the talk

a question of security

when things go wrong

it can be done

7. ALL ABOUT ASSETS

Beginning with benchmarks

get to the big picture

the asset question

bonds or equities?

on the frontier

a pertinent observation

pushing the envelope

softly, softly

open and shut

recast the debate

it's all about risk

in the news

waking up to LDI

back to risk again

active or passive?

costly activity

pay for performance

8. LOOSE BUT IMPORTANT ENDS

Elephants in the room

a question of funding

an interesting partnership

back to basics

half full, half empty

This book is all about being effective as a trustee. I decided to get writing because I was growing perplexed by the changes in my own role as a trustee and somewhat dismayed at what seemed to be a generally low level of knowledge and confidence among trustees I met and to whom I talked. I was elected by scheme members as a trustee of my company's pension scheme in 2002 (typically, I was the only candidate!) and like to think I have learned a lot from the experience. But I have had to learn most of this as I have gone along. No one ever sat me down and gave me a set of commandments. The one professional training course I went on was little more than an overview, and presented none of the actual dilemmas that trustees face routinely. Worse, the sections that discussed investing were so amateurish it was embarrassing.

So let me begin with some general observations about pension fund trustees. Most trustees are struggling to keep up with the demands of the job. Too often, funds are making decisions that are wrong or are deferring perfectly good decisions because the trustees are afraid they might make a mistake. Only a handful of trustees actually know anything about the biggest factors that determine whether their fund will sink or swim in the long run. Too many trustees are appointed by their companies and are terrified of being seen to cause trouble by questioning how things are done. They would rather sit there and rubber-stamp things than challenge something that might be unethical, dodgy or just plain stupid. Only rarely do trustees cross-examine their advisers and check whether they are talking sense and whether the fund is therefore pursuing the right goals. The quality of advice varies enormously, which makes it difficult to know whether to trust what you are being told. And many trustee boards are riddled with conflicts of interest that put all of the trustees concerned in very awkward positions.

Pension funds are quite technical and their fast-changing regulation even more so. If you want them, there are thousands of pages available that elaborate on, or challenge, my text below. If I have made any mistakes, it is entirely my own responsibility. But I have tried to be as careful as possible to make complex matters clearer than they often seem.