As a business specialising in employee benefits, it should be a given that our internal pension scheme is run to a high standard. Like many new generation companies without Defined Benefit legacies, our company scheme was set up as a Group Personal Pension (GPP). A potential problem with GPPs is that they can quite easily sit at the side and can continue to operate with minimal engagement from the Employer.
When auto enrolment requirements were announced, an internal group was established to guide our scheme through the process. As part of this review, the business looked closely at the needs of employees and their engagement with the GPP. This resulted in the commencement of our own internal DC Governance Committee. The committee would have key responsibilities in improving employee engagement with the scheme and monitoring performance.
I volunteered to join the committee as I was interested in representing the interests of my colleagues and developing my own knowledge of workplace pension arrangements. The Committee is approaching its first birthday which would seem the ideal time to share my 6 key lessons learned:
1. Do not run before you can walk…
As a new Committee it can be tempting to review everything in meeting one….but then what happens in meeting two? Initial meetings should be used to develop framework and to build a clear path to move things forward. This will ensure the Committee has long term viability and keeps a balanced agenda throughout the year.
2. The sky is the limit, but alas occasionally too far away…
For a Committee to work it requires boundaries. The first job of a Governance Committee is to set a ‘Terms of Reference’ to clearly define the scope of the Committee. Without clear boundaries and goals it is difficult to measure success and key points can be overlooked. These Terms of Reference should be reviewed by internal stakeholders and agreed to make sure everyone is in the picture.
3. It is all in the blend…
As a pensions business we have a high number of extremely knowledgeable pensions experts in our employment. However, having a Committee filled with the 7 most experienced and opinionated people is a recipe for disaster. In addition, selecting individuals from one area of the business could alienate the workforce. Our Committee is made up of individuals from Pension Fund Accounts, Pension Consulting, Business Support and Marketing. We also have representation from Glasgow, Belfast and London. This blended approach was managed from the selection process and will be maintained (where practical) going forward.
4. However, make sure the recipe is right…
Whilst your committee should represent the business as a whole, you should always ensure you have a few experts! We have a number of subject matter experts and as the Committee develops it is important that we retain a key technical focus. This helps facilitate debate and assists those without in depth subject knowledge. As part of our ‘Terms of Reference’ we developed a Policy to ensure we maintain subject matter experts at a minimal level.
5. Manage your conflicts
Whilst Senior Management love direct feedback, it is important that those on a Governance Committee feel comfortable in discussing the issues. It is wise to consider “day job” Roles and Responsibilities of each Committee member before deciding on their ability to serve. If it is felt a conflict between this role and the Committee exists, then it must be decided if this conflict can be managed or if the individual is not suitable for the Committee.
6. Do not stand still, things must evolve
Individuals are unlikely to wish to serve on the Committee for the rest of their working lives. In addition not allowing fresh Committee members will reduce the flow of ideas and potentially alienate staff members. The Committee must ensure a suitable retirement / appointment process is in place otherwise it is likely to fall flat in the long term.