Richard Butcher, director of Pitmans Trustees, on how governance of group personal pensions has not kept pace with their own evolution

In April 1986 I received some good news. My bosses' boss called me into his office and told me that he was impressed with my work and was going to increase my salary - to the magnificent total of £3,900 a year.

At that moment I realised that I had 'arrived'. I was a man of means, a successful young executive.

Shortly after, I decided that I needed to splash out in order to reflect my new status. So I bought a new Walkman. But what I really wanted, being a young 21-year-old, was a new car. My old Vauxhall Viva, which had cost me £30 and now only fired on three of its four cylinders did not reflect my seniority. So I started to look around.

The car that caught my eye was the Ford Escort XR3i. It ticked all the boxes. It wasn't too ostentatious, but neither was it too tame with its 1.6 l injected engine, luxurious wood veneer, sunroof and - crucially - tape deck with four speakers.

I didn't buy one, as it was still well beyond my means, but I thought about it a lot.

These days I rarely covet cars, but occasionally, for fun, I look around. And you could do a lot worse than the XR3i's successor - the Ford Focus ST-3. What a car: climate control, ABS, electronic brake force distribution, MP3, USB port, SatNav, Autodim rear view mirror and so much more. Oh yes, and 6 speaker surround sound.

It's striking that the Escort and Focus are fundamentally the same car, and yet so different. The technology has moved on and so too have many other aspects of our lives. In place of my Walkman, for example, I have an iPod Nano, a tiny thing that can hold 8000 songs.

So it is with occupational pension scheme design, they have evolved. At the same time that I received my rise in 1986, personal pensions as we know them now, were launched. Shortly after, some bright spark in the marketing department of a life office came up with the idea of a group personal pension plan. The rest as they say, is history; the assent of GPPs (group personal pensions) and the decline of trust-based, predominantly DB, schemes.

But how these have changed over time: do you remember capital units and membership charges, cheque and schedule and only five funds?

So why is the pensions regulator concerned about this?

1)Well, to be fair, they are not. They are concerned however, about the quality of governance being exercised on all of these contract-based schemes. Why? Well answer the following questions:

2)How many FDs are driving a car from the mid-90s (forget the mid 80's)? and how many FDs are 'driving' a GPP which is more than ten years old?

I'd guess a) very few if any and b) lots.

And that is why the regulator is concerned.

Things have evolved in so many different ways, yet many employers do not seem to be taking the advantages (for their staff) that this brings. They are not making the most of the opportunities and are wasting money; money that should be put to better use providing benefits.

It's not the only reason: too few members are not looking around the annuity market, too many employers (and insurers) are not putting enough effort into administration and rarely does anyone monitor the investment performance. In short, it's often the case that no one is exercising any form of governance. As a result, the members aren't getting out of them what they should and neither is the employer.

The regulator wants this to change.

The regulator has published a volume of guidance on the good governance of DC pension schemes (within which category they include GPPs) over the last 18 months.

They stress that 'there is no legislative requirement for any governance arrangement'

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