Workers should have stronger voice in pension governance, TUC says

Workers must have greater representation in the governance of large pension funds as the UK pension system consolidates into fewer, larger schemes, according to a report from the Trades Union Congress (TUC).

The report, launched at the TUC’s Pension Conference, warned that worker representation on pension boards is declining as the UK shifts away from employer-based schemes toward multi-employer arrangements, which are often exempt from requirements for member-nominated trustees.

The TUC argued that pension schemes perform better when members are directly involved in governance.

It said member-nominated trustees improve accountability, decision-making, diversity and engagement while helping reassure savers that their pensions are managed in their interests.

Mandatory member-nominated trustees were first introduced in the UK after the 1991 scandal in which Robert Maxwell stole £450m from pension funds belonging to companies he controlled.

However, the union body said changes to pension structures mean fewer workers now benefit from these protections, and plans to consolidate the sector into larger “megafunds” could accelerate the trend.

As the Government consults on improving pension governance standards, the TUC has called for rules that ensure members have a voice on trustee boards regardless of the type of pension scheme used by their employer.

The report also recommended that the UK learn from international models such as Australia and Canada, where large multi-employer pension schemes with millions of members still maintain strong member representation structures.