Member-nominated trustees and the Emperor’s New Clothes


11 May 2023

Member-nominated trustees should not be afraid to ask awkward questions, says Maggie Rodger.



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Member-nominated trustees should not be afraid to ask awkward questions, says Maggie Rodger.


With the latest round of consultations ending and the liability-driven investment issues and inflation beginning to settle, perhaps trustee boards can begin to draw breath.

Most are well into considering where their scheme now stands and whether their previous journey plan needs to be revised in the light of circumstances, market movements, and the proposed funding and investment strategy plans. The latter, along with the Guaranteed Minimum Pension and pensions dashboard, will be our tasks in coming months.

The position of a member-nominated trustee was introduced post-Maxwell to ensure there is a board member whose role is to act as guardian of the scheme for members.

Does this still apply today? How does a member-nominated trustee, who has probably been elected or selected onto the trustee board with a variety of skills, but might not possess professional investment knowledge, cope with this world?

To be responsible for the retirement quality of others is a huge responsibility (even with all of the investment advice open to us). And one which member-nominated trustees do not take lightly.

But, it needs to be remembered, that, a good pension scheme is built on more than good investment and investment governance alone, although they may match up more closely at the other end of the spectrum.

Good administration and communications are also the hallmark of good schemes, but these skills rarely all reside in the same person.

On the trustee board, a variety of skills and experience are needed. But perhaps the most important skill, in investment as in all the other areas, is the ability to read and absorb a constant ow of new material and, vitally, to ask questions.

So as lay trustees, individually and with the rest of our boards, we need to train and continually learn.

New challenges or investment products are always being put forward, either because our schemes are: changing their strategic plan; because of the stage of the journey they have reached; new regulation; market conditions; or possibly all at once.

Among all the investment jargon and acronyms, the presentations or reports with long appendices full of charts and figures, it’s easy to forget that at heart there are some fairly basic questions that need to be asked.

Whatever the investment product being suggested, trustees need to ask: what is the expected return? Have we identified all the possible risks?

And, as ESG has become such a fundamental issue, am I happy for my return to come from this source if it affects the future world for members’ retirement?

In essence, however excellent the investment seems, – how well does this fit my scheme, its size and journey plan?

Because the pensions investment industry is so well connected and informed, with multiple daily newsletters, frequent webinars and conferences there is, perversely, a huge danger of groupthink.

If every article we read is about something new or the “right answer” to a pensions problem it is far too easy for it to be adopted without sufficient thought. Have we looked at all the risks in the context of the rest of the portfolio for this specific scheme?

That is the point of member-nominated trustees. They have the potential to bring a different life experience and perspective from the ‘industry voice’ and that doesn’t mean just a better knowledge of the member.

Member-nominated trustees have the freedom to probe and to ask questions at a level experts may not be paying attention to.

The point of member-nominated trustees is to be not just a member voice but an independent, non-pensions industry voice.

Diversity in all its forms is vital.

Member-nominated trustees should not be afraid to ask awkward or “silly” questions. In fact, it is often a helpful part of the process to avoid groupthink.

Sometimes it may make us feel as if we are standing among the cheering crowd and querying the Emperor’s New Clothes.

But, on occasion, that is a position that needs to be taken for the protection of all.

Maggie Rodger is co-chair of the Association of Member Nominated Trustees (AMNT).


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