Ever since the Pensions Act 2004 took effect, most trustee boards have faced challenges that exceed the available time and resources. Increasing complexity and volatility in the investment marketplace, together with regulatory pressure for more transparent and business-like behaviour, make it imperative for trustees to manage their schemes efficiently and effectively.

How Mercer can help

Mercer helps trustee boards establish a governance framework, based on best-practice business principles, that enables trustees to identify strategic solutions and operational synergies for effective pension plan management.

We provide expert advice and guidance by:

In addition, we provide outsourced pensions management, adviser management and trustee secretariat services.

Why Mercer?

Mercer is a market leader in pension plan governance and operational effectiveness consulting. We have a multidisciplinary team of consultants who bring expertise across the strategic, technical and operational aspects of governance. With our wide range of practical experience and well-developed intellectual capital, we believe that our team is unique in the industry.

Our approach to governance and operational effectiveness consulting is based on the conviction that one size does not fit all. While the principles of effective governance are constants, the way we apply the principles is how we add value. We work closely with our clients to understand their needs and tailor the delivery of our advice.

Our style of delivery, especially around high-level governance consulting, is very facilitative. Stakeholder involvement is essential for the success of each project. We pride ourselves on working in partnership with our clients to offer truly bespoke advice and solutions. This experience enhances our intellectual capital and informs our consulting advice for the benefit of all our clients.

Leveraging Mercer's expertise

In Mercer’s experience, the demands on today’s pension plan trustees fall into these areas:

While each of these involves many issues, they present opportunities as well as challenges. Successfully addressing them permits trustees to meet their key objective of paying the right benefits to the right people at the right time.

Mercer provides expert consultancy advice and solutions, assisting trustee boards in each of these key areas.

Board effectiveness

Like a successful business, a successful pension scheme needs an effective board – one that has a well-defined strategy, a robust decision-making process, clear policies and accountabilities, and a rigorous approach to monitoring and risk management.

Mercer has materials and tools that supplement our consulting approach to improving board effectiveness. Working with the board, we can help surface issues and provide the means of addressing them and pushing through improvements. Our reviews of board effectiveness cover board process, decision making, skills and competence, board structure, team dynamics and relationship management.

How Mercer can help

Mercer has a suite of material and tools to help trustee boards become more effective. For example, Mercer Transform™ covers the various aspects of what makes a board effective, including decision making, knowledge and skills, team dynamics and relationships with advisers, providers and the employer.

Relationship management

Successful plan management relies on management of a number of essential relationships. The most important relationship is that with the employer – one requiring more formality under the Pensions Act 2004, which some are finding difficult to establish. Trustees also rely on advisers and providers in the discharge of their duties. Active, ongoing management of these relationships can add value for the trustees.

How Mercer can help

Mercer can help formulate appropriate policy and process around the employer relationship to ensure that trustees receive the information they need to monitor the sponsor’s covenant and formulate strategy. We also assist in provider and adviser selection and performance monitoring.

Risk management

The regulatory recommendation to adopt a risk management framework has been seen as putting a burden on trustees. However, if done properly, it can add significant value for relatively modest effort. While the prospect of risk identification can be daunting, the process is made simpler and more focused by basing it on trustees’ key priorities or objectives.

How Mercer can help

Mercer can work with trustees to establish an effective risk management process in a number of ways. We facilitate workshops to review trustees’ key aims and priorities, identify the risks they entail, and score and prioritise the risks. Mercer can then help in setting up suitable risk controls and a monitoring system.

An alternative is the use of Mercer Risk Manager™, a pre-populated risk management tool. While it requires trustees to identify their own objectives and score the risks themselves, Mercer can assist in this process also.

Operational effectiveness

Trustees, employers and pensions managers realise that there are important decisions about how to provide pensions services. Costs are significant, resources may be limited, and mistakes can be hard to correct. Even if a plan is closed, it will still need to be managed for decades. Choosing the right approach to pensions administration is key to operational effectiveness.

How Mercer can help

Mercer’s operational effectiveness advisory services include:

Outsourced pensions management

Trustees need dedicated pensions management support to enable them to fulfil their duties. That support is often provided by the employer. Some trustee boards are concerned about over-reliance on an employer-provided resource, especially if the in-house pensions manager supports both sponsor and trustees and therefore has potential for conflict. This has led an increasing number of trustee boards to seek a support resource that is devoted wholly to them.

How Mercer can help

Mercer provides an outsourced pensions management service for trustees of large pension funds who require independent, strategic guidance and expert direction and support. The service consists of three phases:

As an alternative to outsourcing the entire pensions management function, certain elements of the service, such as trustee secretariat support, can be outsourced individually.