The Law Debenture | Pensions News

Ashworth The Reluctant Risk Taker

Wed, 29 Jun 2011 08:00:00 GMT

With a share in the responsibility for the financial well-being of tens of thousands of people, Mark Ashworth is a great believer in staying focused. “If you think about it too much, you might not do anything,” he says. “So you focus on the tasks at hand, make sure you do them well, and try not to be overwhelmed.”

Mark Ashworth

As head of the professional pensions trusteeship division of Law Debenture, one of the UK’s oldest independent trustee firms, he sits on the board of some of the UK’s biggest pension funds – among others, two schemes of the Lloyds TSB Group, worth about £15bn, the Royal Mail Pension Plan, worth about £26bn, and the Sainsbury pension scheme, worth about £4bn.

Like most pension trustees, Ashworth does not court publicity. He is patient and precise, and always says exactly what he means to – qualities he probably acquired during his training as a barrister.

Dawid Konotey-Ahulu, founder of the consultancy Redington, studied for the bar with Ashworth 24 years ago, and his firm works with some of Ashworth’s client schemes today.

He said: “Mark always uses his words carefully. He’s a very good leader of board discussions. His questions are well-chosen and highly accurate, which will be his barrister’s training coming through.”

Ashworth is willing to stick his head above the parapet when he thinks it will benefit his clients. He recently wrote a letter to the Takeover Panel that received some media attention, calling for trustees’ role in takeover talks to be recognised, with a formal requirement for bidders to set out their plans for target companies’ pension schemes in advance.

To bankers and others working on M&A transactions, it can sometimes look like pension trustees are trying to scupper deals by abruptly shifting to “worst-case scenario” deficit measures, known as buyout valuations.

Ashworth said: “I don’t think trustees should automatically switch to the buyout valuation. They may be compelled to, if they think the company’s financial strength is being weakened.

“It may be that this perception stems from the go-go days before the credit crunch, when a lot of corporate activity was highly levered, and trustees were being driven to use the buyout valuation. But it is not trustees’ job to frustrate all corporate activity – it can sometimes be in their interest, if their company is being acquired by a bigger and stronger group.”

Pension trustees can be forgiven for their aversion to risk. Their job has grown steadily more onerous as tougher accounting standards, stricter pensions regulations and increasing life expectancy have turned defined-benefit pension deficits into costly, troublesome problems for companies.

Dealing with deficits

Despite improvements in funding since the depths of the financial crisis, Ashworth said deficits are still the most pressing difficulty.

He said: “There has been a real shift in the past few years. Where maybe before companies and trustees were more comfortable running this investment risk, now many have decided they simply do not want it any more. Many trustees and companies are reluctant risk-takers, trying to get to full funding.”

The fund management and pensions consulting industries are not short of solutions to the problem. One that has piqued interest from trustees is delegation – a way for full-time market professionals, such as consultants or fund managers, to take more responsibility for managing pension funds’ investments.

Known as fiduciary management, this can involve trustees delegating decisions such as when is the right time to move out of equities and into bonds, as well as the operational responsibility for making it happen.
Ashworth said: “It’s being considered a lot right now. There are few schemes that have not looked at it. I
think there is a recognition among pension schemes that sometimes decision-making is not fast enough.”

In the UK, consultants Towers Watson, Mercer and Aon Hewitt are offering to do this job for trustees, while fund managers such as BlackRock, SEI and Mn Services have moved into direct competition with them.

Some fund managers have grumbled that consultants are using their powerful role in the pensions industry to squeeze them out of such fiduciary business. Ashworth said the best antidote to such suspicion was an open, competitive tender process.

He said: “I don’t regard fiduciary management as being some new category of service. If someone is offering to invest the funds then it’s fund management. I don’t see that there is some new hybrid activity that justifies suspending normal processes and principles.”

Non-cash assets

But one of the most productive ideas for fixing the deficit problem has come from the other side of the table – from companies and their advisers. They have offered to put non-cash assets, such as property portfolios, into pension schemes. Corporate adviser Deloitte expects to help arrange £2bn worth of these “contingent asset” deals this year.

Two of Ashworth’s clients have done this with their pension schemes – Sainsbury with a portfolio of its stores; Lloyds with a basket of debt securities.

Ashworth will not be drawn on the specifics of either client’s arrangement, but he said: “In general, if there is not to be immediate cash funding then these deals are very sensible. They can also provide valuable additional security.”

But he added: “Trustees really need to make sure that these are unencumbered assets. If a company were to fail, lenders will be in there putting claims in on everything that moves. This is why trustees should set up these arrangements to protect against the risk, even if very remote, that a company gets into any trouble. You should buy umbrellas while the sun is shining.”

LawDeb Pension Trustees

LawDeb Pension Trustees is pleased to announce the appointment of Graham Forest-Jones

Mon, 06 Jun 2011 08:00:00 GMT

06nd June 2011

LawDeb Pension Trustees

Press Release

LawDeb Pension Trustees is pleased to announce the appointment of Graham Forest-Jones to help develop and promote its pension trusteeship business.

Mark Ashworth, Head of Pensions at LawDeb Pension Trustees, said: “I am delighted that Graham, with his extensive experience, is on board to help us develop and promote awareness of our services. We are keen to build on the existing services which we offer to reflect the changing nature of work-based pensions. Helping with the governance of contract-based DC schemes is one example. Graham’s support will help us to realise our plans and also enable our experienced team to continue to focus fully on the needs of their clients.”

Graham Forest-Jones commented: “I am very proud to have been appointed to work with LawDeb Pension Trustees, the leading trustee team in the country. Their professionalism and thought-leadership is well known, as is their dedication to pensions in general and to their clients in particular. I look forward to helping LawDeb Pension Trustees develop and deepen its trustee services.”

Graham can be contacted at graham.forest-jones@lawdeb.com, or by telephoning on 020 7696 5905 | 07771 994 965 (mobile)

Notes:

Law Debenture is a leading provider of independent professional trustee services to the financial markets and pension schemes. The company has been in business for over 100 years and has been providing pension trustee services for over 30 years.

LawDeb Pension Trustees acts as a trustee for over 200 pension schemes with over 1 million members and £120bn in assets. Of these, one third have less than 500 members and one third have more than 5,000 members. The trustee team acts for DB & DC schemes, registered and unregistered schemes, ongoing schemes and schemes that are closed or being wound up. We are trustee to schemes for many quoted and unquoted employers. Each member of our team has experience of chairing trustee boards.

Graham Forest-Jones has been the marketing director of two prominent pensions businesses and head of a communications consulting operation. He is currently a company director and an independent business development consultant.

- Ends -

LawDeb Pension Trustees in the news

Tue, 24 May 2011 08:00:00 GMT

Investors cleared for UK Green Bank investment

Mark Cobley of Financial News

24 May 2011

The UK's new Green Investment Bank will have the freedom to raise up to £15bn on the capital markets in the years ahead, the government confirmed today, offering pension funds and other financial investors the chance to participate in sustainable infrastructure projects from 2015.

Nick Clegg, Deputy Prime Minister, said yesterday the bank would be set up under legislation to guarantee its "independence and enduring nature" as an institution, giving investors confidence. The government has committed £3bn in funding, and hopes to raise another £15bn from outside.

He added: "Investments will be able to be made from April 2012, just eleven months from now. Possible early priorities for the bank are offshore wind, waste, and non-domestic energy efficiency."

Ed Matthew, who is director of Transform UK, a campaign in favour of the Green Bank, was at the briefing and said Clegg had made explicit that the bank would be able to borrow money from outside investors after the 2014/5 financial year.

He said: "Clegg's language was unequivocal: the Green Bank will be able to raise money from the capital markets. It's really good news. There is massive interest from the financial sector in participating. We will have to wait to see exactly how the legislation is framed, but that is what he said and we will hold him to it."

There is also one further proviso - by 2015, the UK's debt-to-GDP-ratio must be falling, or the bank won't be able to borrow after all.

Matthew said there had been suggestions the bank's borrowing power might not be made explicit, and presented only as an option. He said: "If the Green Investment Bank could only borrow from the Treasury it would never have borrowed."

The announcement will likely be welcomed by investors interested in participating in green projects. Several leading fund managers, including Aviva Investors, F&C, Henderson Global Investors, Insight Investment, Jupiter Fund Management and The Co-Operative Financial Services put their names to a letter supporting the idea of a Green Bank when it was first mooted.

Fund managers are expected to be keen because their clients - pension funds - are also expected to be keen. Mark Ashworth, a professional trustee with Law Debenture, who works with several of the country's biggest pension funds, said these investors might well be interested in buying bonds from the Green Investment Bank, provided the securities met their requirements.

He said: “In general, pension schemes are looking for long-term, inflation-linked assets. If that is the sort of basis on which the bank would raise funds, then subject to a question around understanding the security of the assets, it does sound like they would be attractive assets for pension schemes.”

The LawDeb Pension Trustees Annual Debate

Fri, 20 May 2011 08:00:00 GMT

uploads/files/PensionTrusts/debate-Motion proposed by Steve Hull.jpg
“This House believes that pensions would be better off without politicians”, a popular subject for the sixth annual Law Debenture Debate chaired by The RT Hon Michael Portillo, at the beginning of last week.

Speaking for the motion were Steve Hull from Ashurst, Mark Johnson from Blackrock and Paul McGlone from Aon Hewitt (who boosted his team’s numbers by introducing ‘Dave’ as the just-appointed Pensions Minister, but who also resembled a ventriloquist’s dummy). Speaking against the motion were Norma Cohen from the Financial Times, Michael O’Higgins, the Chairman of the Pensions Regulator, and Nigel Waterson who was until the 2010 Election the Shadow Pensions Minister.

The Debate took place in front of a packed auditorium of two hundred and seventy pensions professionals, who had their chance to add to and develop the points made by the speakers. The secret voting at the beginning of the debate revealed that there had initially been strong support for the motion, with 54% voting for and 46% against. Whether it was a measure of the strength of the arguments against, or the strengthening realisation that ‘pensions’ was too important a subject to be left out of the democratic process, the result of the second vote held at the end of the proceedings revealed a dramatic turnabout: 64% voted against and 36%, were in favour.

At the reception afterwards many participants were already discussing the possible topic of next year’s debate. Any suggestions to Mark Ashworth at LawDeb Pension Trustees on mark.ashworth@lawdeb.co.uk

LawDeb Pension Trustees is pleased to announce the appointment of two professionals to its pension trustee team.

Thu, 19 May 2011 08:00:00 GMT

LawDeb Pension Trustees, a leading provider of professional trustee services, has further strengthened its pension trustee team with the appointment of Michael Chatterton and Donny Hay.

Michael Chatterton is an actuary with over 25 years’ experience of providing professional services both in the UK and internationally, having initially trained as a pensions actuary at Bacon & Woodrow.

Prior to joining Law Debenture he established the Settlement Solutions team for occupational pensions clients at Watson Wyatt in the UK. This team consulted with clients wishing to optimise their journey to settling their pension liabilities and also offered an outsourced service to assist in the governance of these.

Before that he was Chief Executive of a global outsourcer based in New York. He also established client service businesses in London, Zurich, Hong Kong, Singapore and Tokyo. Services included strategic design of benefit plans, outsourced pensions/benefits management, adviser liaison and management, and administration. His clients included a range of multi national corporations including banks and other financial services institutions.

Donny Hay is a Chartered Accountant with 25 years experience in the investment management industry. After training with KPMG he joined Edinburgh Fund Managers where he spent 9 years managing international equities. From 1995 to 1999 he was with ING (New Zealand) as General Manager, Institutional Funds Management. He then worked for 9 years with Martin Currie Investment Management as Director of Institutional Business Development.

He has served as an AIMSE Council Member and as a Trustee of the Martin Currie Pension Fund. In 2009 he set up a financial services consultancy business.

Mark Ashworth, director at LawDeb Pension trustees, said: “We are delighted to welcome Michael and Donny on board. They bring a wealth of professional, commercial and investment experience to complement the existing team.” He added: “As the challenging economic environment continues, professional trustees of Michael and Donny’s calibre will provide much needed support for occupational pension trustees in the face of growing complexity and uncertainty.”