What does the role of CEO for the Royal Mail Pensions trustees entail?
My primary role is to support the work of all the trustee groups of the Royal Mail pension schemes – the Royal Mail Pension Plan (DB), the DC scheme and also the legacy executive arrangement. Fundamentally, my team’s role is to make the increasingly challenging role of the trustees as easy as possible, and aim wherever possible to put things on a plate for them. In practice, we work closely with the chairs of trustees to help drive the respective agendas, providing strategic support to develop, implement and manage activities on behalf of the trustees and thus, ultimately, our members. One of the most appealing aspects of the job is that no two days are the same, and in that I consider myself very fortunate.
What are your aims and objectives as CEO?
The overriding aim of anyone in a role like this is to look after the members. In supporting the work of the trustees, the objective underlying everything we do is to promote and protect the interests of all our scheme members.
As a team, we are always striving to improve ourselves. We have a strong governance framework that provides a sound basis for our activities, but we can’t afford to be complacent, particularly in such a rapidly evolving environment. There is always room for improvement, and common areas of focus for us are cost-effectiveness and quality of solutions. This approach enhances the expected member outcome.
What have been your biggest challenges to date?
The most significant issues we have faced since I became CEO were the benefit reforms last year. This has led to a commitment from Royal Mail, subject to certain conditions, to provide defined benefit accruals at least until 2018. Whilst benefit design is led by the sponsor, trustee consent is required for any rule change and in this case it was only given a single alternative outcome - closure of the DB plan. So on the face of it the answer was obvious but, as is so often the case, the journey was a lot more challenging than that sounds.
The pensions agreement reached is very positive for our members. On the DB side, the agreement helps to provide confidence about continuing accrual over the medium term. For our DC members, the company has proposed a significant increase in contribution levels. To have brought together such potentially disparate interests and achieved positive change that all sides can agree on is a real success story.
All in all, in my view, an enormous amount of progress has been made by our sponsoring employers and the unions over the past year. I think there is much to be positive about here and we are benefiting from the presence of progressive mindsets on all sides.
What is your biggest challenge today?
Although we are confident we are doing a good job on behalf of our members, I’d like us to be able to communicate more effectively with them. We all know that pensions are too often clouded by jargon and red tape, which are a turn-off for the very people they are designed to help. I see a core challenge for us now as exploring ways of improving member communications, including learning from the positive experiences of others elsewhere in the industry. It won’t happen overnight, but this will be a focus for us in the coming year and beyond and we hope to obtain directly the views of our members to help us achieve a positive outcome.
How will the changes in the recent Budget affect you?
The changes announced in the recent Budget are genuinely radical, particularly for existing DC schemes like our own. I think it will be some time before the real impact of these changes is fully understood, and it could be years before the best solutions and practices have been devised and implemented. That being the case, we face a huge challenge in getting an appropriate structure in place for members by March 2015. One of the keys to achieving this successfully will be effective communication with members.
In addressing challenges like this, it’s crucial to have the right people working with you, and I am delighted to have recently recruited a very talented resource within my team to manage the DC scheme – Ben Piggott, formerly of JLT. Ben has deep investment expertise which will be invaluable in plotting the right course for our members.
How did you get into pensions and how has the industry changed since then?
Having an aptitude for mathematics and problem solving led to me becoming a benefits actuary. I realise there’s no way to make that sound exciting, but it does mean I now find myself in a role which is not only fascinating, but also entails tremendous responsibility for the pension benefits of thousands of people.
The most notable change in the pensions industry since I started has been the ongoing shift from DB to DC pensions, a trend that really gathered pace following the market downturn of 2000. In this respect, the ongoing accrual of benefits in the Royal Mail Pension Plan is very valuable for our DB members.
I’ve found it a distinct advantage having a consultancy background. Being a poacher turned gamekeeper means I’m pretty wise to their tricks, and not averse to giving our advisers the occasional kick up the backside. Having that insight also means we can keep fees in a good place. I’m confident the advisers we use are the best in the market – after all, if they weren’t I wouldn’t be doing my job properly.