Alright Guv’nor! 5 tips for getting GPP governance right

The dictionary definition of a governor is ‘an official appointed to govern’ or ‘a person in authority’. As a school governor of a mixed secondary school with 1,100 pupils in Buckinghamshire, I would add a further definition: ‘slightly bonkers parent who willingly volunteers to help a school but then realises that there is never any money’.

Here are my favourite governor related stories from the last four decades or so:

Detective Inspector Jack Regan (John Thaw) – The Sweeney (1970s). He was always ‘Guv’ to his faithful sidekick, Carter (Dennis Waterman), and often found to be shouting ‘shut it!’. John Thaw was super gritty in this drama, before Morse made him polite (relatively), cerebral and grumpy; a typical encounter with Carter would go like this:

[Carter pulls out a packet of cigarettes and puts one in his mouth] Det. Sgt. George Carter: ‘Sorry, Guv, I've only got one left.’ [Regan takes the cigarette out of Carter's mouth and puts it in his own] Det. Insp. Jack Regan: ‘I only want one.’ [Regan fumbles for his lighter] Det. Insp. Jack Regan: ‘You got a light?’ Det. Sgt. George Carter: ‘Nope.’ Det. Insp. Jack Regan: ‘B@stard.’

I once heard of a drinking game played by college students in the ‘70s called ‘Guv’. You had to drink a finger’s depth of beer every time Carter said ‘Guv’. It all went wrong one day when Regan got shot, leaving a distraught Carter kneeling over him, repeatedly shouting ‘Guv, Guv, Guv...’

Paul Ince – a self-declared guv’nor at West Ham, who apparently demanded to be addressed by this name. Following his big money move to Manchester Utd, he allegedly insisted people call him guv’nor there too. However, the top players, like Bruce and Keane, weren’t having it and nor was the real guv’nor, Alex Ferguson

The Guv’nor – a film about the life of Lenny McLean, former bare-knuckle fighter, mob enforcer and doorman in the 1960s. He famously co-starred in Guy Ritchie’s Lock Stock & Two Smoking Barrels as ‘Barry the Baptist’. His method of eliciting information from dodgy geezers involved plunging their heads under water, and he allegedly hung out with the Krays and Ronnie Biggs (no relation by the way)!

So where are we in terms of Group Personal Pension (GPP) governance? It is definitely growing in credibility, and here are my five top tips on running an effective committee:

1) Aim to achieve ‘good member outcomes’

Hard to define, but here’s a good stab at it. A member is likely to enjoy a greater pension income if the following are in harmony:

They pay in enough. A mid-teen total percentage of salary should be enough in most cases. If the employer matches the employee’s payments, we are talking about 7% from the employee. After tax incentives, this should only cost the employee around 4.75% of net income. Let’s stop worrying about telling your staff 8% is not enough - the place to start this conversation is in the governance committee.
It grows well enough. Good blended mixed-asset tracker funds, with low management charges, should achieve a suitable level of growth. Likewise, this needs to be monitored within the committee.
They do it for long enough. Forget age 22, enrol all employees as soon as you can. Get them joined early and keep them in the plan – that way they have a chance for compound growth to potentially work over four decades.

2) Encourage employee committee involvement

Not like a member-nominated trustee though, it doesn’t need to be that formal or painful. Why involve employees? Because it gives the committee credibility with the wider employee base and these members can be living, breathing, walking, talking pension champions. It works!

3) Run some training

This isn’t Continuing Professional Development (CPD), as a GPP governance committee is still a voluntary arrangement within most companies. Keep it simple, make it fun and ensure that everyone is on the same page. This helps hugely in relation to the previous point. And fun is important – let us not allow these meetings to get dragged into the bland and boring trustee meeting weeds of occupational pensions. It will slowly kill the committee otherwise.

4) Keep a record of activity

This enables a great audit trail and ensures that discussions around areas like the default fund are properly documented. It will avoid the chest-prodding employee, grumpy about his latest annual statement, catching you off guard about fund performance. You will be able to calmly state: ‘the committee is fully aware of the position and is working with the provider, as we reported from the last meeting’.

5) Good news is worth sharing

If the committee is being effective, summarise progress in an all-employee communication shortly after the meeting. It will do no harm and may start to change the culture of suspicion towards company sponsored schemes that pervades many businesses.

So, who is the guv’nor? The governance committee is collectively, but not in terms of the definitions I provided at the start of this article. Possibly a little more like Lenny McLean, working the door of the scheme, and ensuring that the best outcomes are gained for the members within - but no jeans or trainers mate!

James Biggs is head of financial being at Lorica.

This article was provided by Lorica.