Employee Participation: The Pension Trustee Experience

Date01 May 1982
Published date01 May 1982
AuthorJ. Hyman,T. Schuller
Subject MatterHR & organizational behaviour
Employee Participation:
The Pension Trustee
by J. Hyman and T. Schuller
Research Fellow and Research Director, respectively,
CRIDP, University of Glasgow
No one today can doubt that pensions are big news.
Whereas a few years ago those involved in pension matters
were left to conduct their affairs away from the spotlight
of public attention, in more recent times their activities
have attracted substantial interest attended by official en-
quiries, increasing scrutiny and suggestions of regulation.
There seems to be little doubt that one of the major fac-
tors in bringing about this change has been the increased
awareness of the vast size and dramatic growth of pension
This in turn has led to substantial debate over the
identity, power and accountability of those who control
these funds and the use to which pensions money is, or
may be, put. Not surprisingly, it has been the labour move-
ment which has expressed most concern about these issues
and been most questioning over the directions of pension
fund investment policy and its relationship with the in-
terests of union members. One suggested means through
which a broader representation of member interests can be
established is by the presence of pension scheme members
on the decision-making bodies of pension funds. Indeed,
in 1976 a White Paper was published by the then Labour
Government which gave expression to these ambitions by
proposing parity representation of union-appointed
members on the boards of trustees which are legally
responsible for the management and administration of
pension schemes[1].
Though somewhat obscured by their vigorous and very
public opposition to the 1977 Bullock Report, the response
from management and those engaged professionally in
pensions to the possibility of statutory implementation of
trustees appointed through trade union channels was
uniformly unenthusiastic, if not outrightly
insisted that many schemes already provide for employee
participation which had always been encouraged by
responsible management and by representative bodies in
the pensions world. Legislation was therefore unnecessary.
Moreover, selection of member trustees by the unions
would effectively disenfranchise those employees who were
not union members, but who nevertheless maintained a
direct and equal interest in the performance and direction
of their scheme and the benefits to be derived from it.
Union calls for more involvement in the investment of
funds and concern that subsequent policies might not be
based on strict economic criteria led management
spokesmen to argue that, not only is it the prime duty of
trustees to be guided exclusively by principles of economic
return for their members, but that to depart from these
criteria would represent a dereliction of duties for which
trustees would have to bear ultimate responsibility.
Constrained both by this atmosphere of fierce debate
and the necessity for political compromise, the Govern-
ment felt unable to implement the White Paper proposals
and the pension schemes were again left to continue with
their affairs on the voluntary basis to which they were ac-
customed. Though the changed economic and political
climate may have led to less persistent calls for member in-
volvement in pension schemes, it is questionable whether
there has been a concomitant diminution of interest in
their activities. Hence the recent report by the Wilson
Committee[3] sparked off a range of discussions in which
pension funds figured prominently[4]. Moreover,
economic circumstances have helped to stimulate the
search for new investment sources which might alleviate
the worst effects of the recession and provide the spring-
board for eventual recovery. Mobilisation of the funds'
immense resources into the regeneration of British industry
has been proposed as one means through which future pen-
sions could be guaranteed by the creation of productive
jobs and through continuous economic growth[5]. Such,
apparently, is the view of the NUM members sitting on the
board of the National Coal Board pension scheme who
recently refused to endorse the budget and expenditure
programme of their fund because of its emphasis on
overseas investment at the expense of domestic manufac-
turing industry[6]. The recession, of course, has had other
more immediate effects, notably the contraction of the
working lives of many through redundancies and early
retirement. Both of these are also likely to lead those af-
fected, and those who represent them as negotiators or
trustees, to examine their pension arrangements.
Thus calls for employee involvement do not rest on the
singular aim of controlling and directing investments. But,
as the trustee board is legally responsible for the scheme in-
vestments and discharge of responsibilities to members, it
is participation on that body to which most attention has
been directed by those concerned to achieve more influence
over pensions. With this in mind, and based on findings
from 120 pension schemes, the aim of this article is to look
at the trustee board in more detail and in particular to ex-
amine its nature and composition; to seek evidence of
member presence and, where this exists, of member activi-
ty and the forms which it takes.
The Trustee Board
The assets of a pension fund comprise the accumulated
contributions of employer and (usually) employees which
are invested for the benefit of scheme members. For their
protection these assets are maintained under a formal trust
*This paper arises out of research which is being conducted on participa-
tion in the management of pension schemes at the Centre for Research in
Industrial Democracy and Participation based at the University of
Glasgow. The research is being funded by the Leverhulme Trust.
6 | Employee Relations 4,5 1982

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