See the Occupational Pensioners' Alliance's list of good scheme governance principles which ROPA fully supports.

In the case of our own scheme, ROPS, we are especially concerned with the following:

1. Formal Recognition of ROPA

2. An Independent Chairman
The Chairman of the Trustee Board is currently a Senior Executive of the Company, and there is thus a potential conflict of interest in any dispute with the Company. We would like to see an Independent Chairman of the Board, who would take a balanced neutral view in such a circumstance. See the Financial Times article: Head on Collision of Interests

3. A Board which is more presentative of the current membership
We seek an increased number of trustees selected by the pensioners.

The Company has frequently advised us that trustees "are not there to represent particular interests but are there, together, to act in the best interests of the beneficiaries of the pension scheme". We are therefore asked to believe that Company nominated trustees, be they the Personnel Director, Finance Director or whatever, act totally independently when wearing a Trustee hat. Similarly, a Trade Union nominated trustee forgets his/her shop steward background when sat at the Trustee Board table. This is the theory but for evidence of the practice see our Pensions Surplus Scandal page. It shows that £215 million was spent to the benefit of the Company and current employees. Pensioners, who did not have a representative on the Board until 1997, received nothing.

The Trustees' solicitors further advise us that "when interests diverge then there is an obligation to hold the balance fairly between those competing interests, within the power available to the trustee company". Pensioners may think that "fairly" suggests "fair shares". Not so, say the solicitors "fairness and equality are different concepts in legal terms". A judgement in 1997 found that under the current legislation the trustees have "no duty to be impartial as between members in service and member pensioners".

RO pensioners who remember the establishment of the scheme in 1984 will recall that Ministers and managers advised us that the Pension Fund would be independent of the Company and run by independent trustees. What was not made clear was that the trustees must act in accordance with the powers given to them by the Trust Deed and that in many instances it is the Company that has the power to designate a course of action. In the case of surplus funding the trustees had the power to improve benefits (including those for pensioners) but only at the request or with the consent of the Company. Our enquiries and researches have shown that they always adopted the Company's proposals and never made any recorded suggestions of their own. We have questioned whether they even knew that they could make proposals.

Given that we are told that the trustees have prescribed powers, why does ROPA want additional pensioner trustees on the Trustee Board? Primarily because we believe that the member nominated trustees should be more representative of the demography of the scheme's membership. In 1984 it was decided that the Trade Unions should nominate 5 employee trustees. At that time there were no pensioners but now the position is as shown below

In spite of these massive changes, up to 2008 the TUs continued to nominate 5 and pensioners nominate 1. Now that the scheme is closed to new entrants the number of employee (or active) members (at the end of 2010, 1030 members - the latest officially available figure) will inevitably reduce as the number of pensioners increases.

Fortunately the Occupational Pensioners' Alliance (of which ROPA is an active member) succeeded in persuading the government to amend the 2004 Pensions Act so that pensioners would in future be involved in the selection of Member Nominated Trustees. The codes of practice issued by the Pensions Regulator state that "in considering the use of constituencies, trustees should have regard to the principles of "proportionality, fairness and transparency". For example it would not, in general, be fair for a Constituency of 100 members to nominate two MNTs and a constituency of 10,000 Members to nominate only one". In 2008 the Trustees decided to change the Trust Deed reduce the total number of trustees from 12 to 8 of which 4 would be MNTs, 3 to be selected by the actives and one from the pensioners. We believe that 2 MNTs selected by the pensioners would be more "fair" as required by the Act.

It is interesting to note that ROPA has always regarded the pensioner trustee as independent and has never sought to instruct them on particular issues or seek information from them about confidential Board affairs. One has to ask, do the TUs and the Company take a similar view?

4. Responsible Investment Policy
The Trustee board should adopt a responsible investment policy and have a "do no harm" clause in its statement of investment principles (SIP), requiring fund managers and other advisors to satisfy the trustees that their investment decisions are not causing systemic harm to the stability of the financial system and therefore to the long term interests of their beneficiaries. Environmental, social, and governance considerations should be taken into account in the selection, retention and realisation of investments and the responsible use of rights (such as voting rights) attached to investments. The current SIP for the RO scheme can be downloaded from here (last updated February 2010).

See also FairPensions - the campaign for responsible investment and in particular the Trustee Best Practice Guide.

Other policies..