Legal and General is to extend its independent trustee-style governance approach to contract-based workplace pensions for employers.
The new governance structure, Independent Governance Oversight, is designed to work both with pension schemes’ own governance committees, and to take sole responsibility where no other governance exists.
Independent Governance Oversight will mirror the governance structure of Legal and General’s WorkSave master trust.
Paul Trickett, independent chairman of the WorkSave master trust (pictured), will chair the committee.
Other members will include Pitmans Trustees and directors of Legal and General Trustees. It will also be supported by an independent investment adviser.
Trickett said: “The current contrast in governance between trust-based schemes and contract-based schemes has been well publicised in recent times.
“Of course, many contract-based schemes work with very high levels of governance, with the sponsor, their advisers and their chosen provider collaborating to the benefit of the members.
“But many others do not operate with such high standards, and some schemes will be wholly reliant on the provider.
“Even with the impetus of political will, it is difficult to envisage a situation whereby employers can routinely up-skill to contribute meaningfully to the governance process, and many employers may have insufficient HR budget to pay for advice. So the governance gap may persist.
“I firmly believe that Independent Governance Oversight will help deliver better outcomes to members of Legal and General’s contract-based schemes and further raise the bar of contract-based governance as a whole.”