Last month’s ACT Annual Pensions Conference underlined the central role of treasurers in dealing with the strategic issue of pensions. This role is not without its difficulties. Aside from the technical and financial issues arising from this complex area, potential pitfalls remain over professional conflicts of interest, where the treasurer has to be aware of the interest of the sponsoring company as well as the requirements of the pension fund. While they cannot be removed from the fray entirely it should be recognised that treasurers can provide a key intellectual/academic role and perspective to help all stakeholders find their way through the pensions maze. While the challenges surrounding pensions remain significant, the good news is that they are not intractable. The message is now understood about the material damage that unchecked and unmonitored pension schemes can do to a company. And radical action is being taken in the form of buyouts, closure and switching to defined contributions. It is clear that taking such drastic steps is not easy either technically, or in terms of social responsibility. The regulatory system in the shape of the Pensions Regulator should ensure that companies do not overstep the mark in their eagerness to rid themselves of the pension problem. But even within the framework it is right that corporates have significant room for manoeuvre. And while many know they have to work hard now to ensure long-term survival, the conference heard how corporates continue to strive to take a responsible attitude to those who worked for them for many years and were expecting a pension in their old age. There are decisions being made that require the wisdom of Solomon. The upheavals in the financial markets over the last 18 months have highlighted the problems trustees face in securing a return while coping with volatility. And while the pension industry is undergoing reform, the structures of trustees’ work and decision-making are still too much embedded in the 19th century. However, the single biggest challenge facing pensions is the question of longevity. The original concept of the pension did not allow for the astonishing feats of medical science which keep large swathes of the population alive for years longer than our forefathers could have imagined even a few decades ago. This increased life span should be a cause of celebration, but it is also undermining many of our long held and unchallenged assumptions about how individuals and how society operates. While it is not just about money, this is a key factor and treasurers have a vital role to play in conveying the difficult news of how finances work. The conference heard from treasurers whose firms are adopting a stance which should enable them to avoid collapsing under a mountain of pension debt while still maintaining sensible pension provision. It is an example that others in the private, and especially the public, sectors should be following with care. PETER WILLIAMS EDITOR ACT Pension Conference Report page 30.
