Anton Seatter, Director – Employer Solutions, recently shared his insights on the importance of strong governance and the role it plays in the operation of Guernsey retirement and savings plans when he spoke at the WE ARE GUERNSEY UK Pensions Virtual Roadshow…
Guernsey’s experience and expertise in the retirement market is leading to the increasing use of the jurisdiction as a centre of excellence for plan governance.
Companies find they do not always have the infrastructure to perform the extensive plan governance they would like. As a result, some face challenges to ensure their pension plans are consistently governed and experienced Guernsey practitioners are stepping in to assist.
The jurisdiction already has an enviable reputation in the pensions market where it has built a full range of retirement options and has the experience to cover a wide range of disciplines including trustee, administration, legal, actuarial and investments. However, regardless of whether it is a Guernsey based plan or not, the jurisdiction has the depth of experience to support companies seeking to outsource their administration or governance needs and other specialist services.
Pensions governance is the system of oversight and controls designed to monitor schemes to ensure they operate in the members’ interest and covers all aspects of the plan’s operation including:
- The review of service providers, including the administrator
- Agreeing the principles that govern the way the money is invested and ensuring those principles are adhered to
- Managing conflicts of interest and ensuring transparency of fees
- Ensuring members have a voice in the running of their plans
Effective governance requires a structured approach that ensures processes are well tested and subject to regular reviews, that roles and responsibilities are clearly defined and that the direction the plan is taking links back to plan’s objectives and member needs.
There is also a strong focus on risk management to help identify potential issues before they happen. The aim is always prevention but if something does happen, the priority is to resolve it quickly, making sure it does not happen again and crucially, ensuring members are not disadvantaged.
The issues around pensions and good governance are evolving all the time. Not unexpectedly in today’s climate, there are a multitude of challenges, not least investment uncertainty, increased regulation and more companies and members facing financial hardship as a consequence of the pandemic and its impact on lives.
Another major driver for change is in the ESG arena. Members are very conscious of the world they will retire into and want their retirement plans to take this into account when determining investment options. There is a general desire to engage even further on ESG matters, with the emphasis on greater integration alongside active monitoring.
Looking to the future all these factors suggest more time will be spent on plan governance which will create added pressure for companies operating multiple plans.
However, technology is moving at a rapid pace and is changing how governance is delivered with the likelihood that artificial intelligence will play a supportive role in more powerful reporting.
Furthermore, international plans will likely become even more attractive. Not only are they cost efficient but they also drive effective governance as they cut down on the number of counterparties.
Guernsey is a natural choice in the pensions market with their service providers either acting as an extension to corporate teams, or supporting them in everything from administration to governance to the outsourcing of specialist activity such as ESG monitoring.