Darren Masters, professional trustee at Capital Cranfield Trustees, joins us for this episode of The Professional Investment Podcast. His news story of the week is Professional Pension’s story that in-house advisers raise conflict of interest concerns.
We discuss the different ways conflicts of interest can arise in a defined benefit scheme such as trustees as employees and possibly also in senior company roles as well as advisers working for both the sponsors and the scheme.
Many professional trustees often come from investment consultancy backgrounds so could favour third-party providers they used to use at those firms. This can become muddled with cognitive bias.
Last year The Pensions Regulator published a framework looking at how the professional trustee works with the aim of increasing its influence over this growing market and its increasing influence on legacy defined benefit schemes.
Our conversation turned to taking a closer look at the different options available for large, medium and small schemes when it comes to building pension portfolios and the endgame options.
We discussed the importance of governance in ensuring the best member outcomes and how difficult it can be for trustees to consider the smorgasbord of different endgame options.
But the heterogeneity of the UK’s 5,000 or so DB schemes mean coming up with simple options are not an option. We finished our discussion by touching on just a few ways pensions schemes can have entirely different characteristics to one another.
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