There is a “failure of calibration” between the political and pension industry timeframes, which the industry has to accept, BESTrustees president, Alan Pickering, has said.

Speaking at the Irish Pensions Authority’s Risk Conference 2023, Pickering detailed how he had the “privilege” of listening to the Irish Budget speeches made in the Dáil earlier this month.

“I think it was a privilege but [the speeches] kept referring to the future, but the two ministers who spoke when they were talking about the future, said 2023, 2024, 2025. That’s not the future for you, the future for you is 2035, 2045, 2055… I think we just have to accept that there is a failure of calibration between the political timeframe and the timeframe with which we operate,” Pickering said.

“It’s often difficult to get politicians to think about pensions but you do get some who are hyperactive and want to achieve an awful lot. What they never think about is the implementation challenge of all their good ideas. An idea isn’t good unless it can be successfully implemented in a timely fashion.”

Furthermore, he spoke about a “misalignment” of regulatory impact between the accumulation and decumulation phases. He highlighted the UK, which has regulations surrounding the charge cap and cost versus value in the accumulation phase, but during the decumulation phase, there isn’t the same control on costs.

“I think one of the advantages of having master trusts in the UK is that you don’t have that sense of false crystallisation… I think having that continual support from a commercial product, which is overseen by trustees can provide the level playing regulatory field that you’re looking for, so we don’t force people to jump ship. At that crystallisation phase, they will be able to talk to them.

“Indeed master trusts can have other things added to them. The master trust can be the spine, and to that spine you can add limbs of financial wellness, mental wellness, and access to all sorts of other things that will help us get more things out of life and help us be more active employees and active citizens. To provide that 'apprenticeship to grave' transition within one financial institution has lots of attractions,” he explained.

Asked about whether he sees a conflict of interest between master trusts and their financial backers by Ireland’s Pensions Regulator, Brendan Kennedy, Pickering said: “There is a tension but I’m not sure that that tension needs to lead to a conflict… It’s my job to make sure as a trustee that the members aren’t taken to the cleaners by an irresponsible profit-hungry business.

“There are regulatory checks and balances. I have to pass a fit and proper person test; I have to give regular reports both in the context of my DB consolidator and my DC consolidator saying what the trustees have done to make a difference. In the case of a master trust, even when you have a master trust where the financial entity that’s sponsoring it is either doing the admin, or doing some of the investment work, you are subject to external reviews.”

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