Welcome to the digital version of our Annual Review for 2020.
After what will be eight years as Chair, I’ll be stepping down from the Board at the end of March 2021, meaning that this will be my final Annual Review. I’d like to start by thanking all the Trustee Directors, both past and present, along with the Employee Pensions team and our various professional advisers for the support and guidance they’ve provided to me.
As the impact of COVID-19 continues to be felt across the UK, I want to reassure members that looking after their pension is the Trustee’s top priority. We’ve implemented the Fund’s business continuity plans and continue to monitor the situation closely. I’m pleased to report normal service has been maintained but like many other schemes, we’ve had to implement practical solutions as offices are no longer accessible and home working has become the new normal. Take a look at our interview with Darren O’Neil, who leads the Employee Pensions administration team, where he talks about how his team has adapted to these challenges.
There had been a steady improvement in our funding level through the year. However, the spread of the COVID-19 virus and the impact this had on financial markets in February and March 2020 led to a significant fall in our funding level. The investment portfolio remains well diversified, reducing specific sector or asset risks. However, clearly this does not prevent falls in asset values in an environment where there’s a global market downturn, like the one that was experienced in the last six weeks or so of the financial year.
Governance has been a key focus for us during the year. We commissioned Aon to undertake an external review and I’m pleased to let you know that this has shown the Fund to be well-run and with an effective Board. We continue to have a clear focus on risk management, with the Board and its Committees monitoring the Fund’s identified risks, as well as considering the potential for emerging ones.
It’s positive that registration for the Member Portal has increased over the year, with well over 40% of members signed up. The Member Portal has proven helpful to the administration team. If you haven’t had an opportunity to log onto the Member Portal, I’d encourage you to do so.
We continue to meet with our advisers on a regular basis, at both Committee and main Board meetings. Since March 2020 the Trustee has chosen to hold these meetings via video conference. This may continue, at least in part, when life returns to normal and we can once again meet face-to-face.
I hope you enjoy reading this edition of Annual Review. If you have any comments or suggestions regarding what could be included in future editions please email pensions.team@nationwide.co.uk.
Pete Wilkin
Chair of the Nationwide Pension Fund Trustee Board
Pete Wilkin will be stepping down from the Trustee Board at the end of March 2021, after eight years as its Chair. We caught up with Pete to get his views on what the key challenges, and successes were, over this time.
This has been a really challenging time for all pension schemes. We have seen significant regulatory change, ongoing volatility in the investment markets and the increased prevalence of pension scams. Looking at the Fund specifically, there has also been the closure to future accrual which the Trustee has needed to focus on.
All that said, I’ve been fortunate to be surrounded by a first-class team. By which I mean not just my fellow Board members, but also the in-house Investment and Employee Pensions teams. I cannot stress enough the positive impact all these individuals have had on ensuring our Fund operates in such a professional, cost effective and efficient manner.
When I first joined the Board, I wanted to really understand what was happening. ‘Kick the tyres’ so to speak across the entire operation of the Fund. This is an ethos we have continued to this day, constantly looking at what we as a Board, or the wider team and our advisers, are doing and making sure that it is not just ‘fit for purpose’ but where appropriate, in line with best practice.
The decision to close the Fund was taken by the Society following discussions with the union. The Trustee’s role was primarily ensuring due process was followed in line with our responsibilities. Our primary objectives as the Trustee are focused on the benefits members have already built up within the Fund and managing the Fund’s assets. In doing this we’re securing the payment of members’ pensions both now and well into the future.
There are a lot of laws and regulation concerning how pension schemes should be managed. Some are focused specifically on pensions and some relate to the wider world. For example, a couple of years ago, as the Trustee, we needed to ensure the Fund met the new information security laws. Keeping our members’ personal and sensitive data safe has always been a top priority and the robustness of our procedures will continue to be monitored. When new regulation or industry standards come into force, we work through requirements and consider whether our procedures can be improved.
As I mentioned earlier, we’re fortunate to have the support of a dedicated in-house investment team and they do most of the day-to-day investment management. As the Trustee, we set the strategy for the Fund focussed on securing our members benefits over the long term in a sustainable fashion. Over the last eight years we have been able to reduce the risk of our investment portfolio and increasingly we are looking to the investments not just to grow but also to protect the Fund against financial risks. Examples of these would be the potential for interest rates or inflation to erode the value of our investments. To address these risks, we now have a more diversified investment portfolio which includes assets to protect, or hedge, the Fund against these specific financial risks. However, it is not just financial risks but also other risks such as climate change that the Fund will increasingly need to consider within its investment decisions.
Yes, in several ways. I think the biggest impact has been in the way we work. Prior to the pandemic the Trustee Directors met regularly, either as the Board or as smaller Committees. COVID-19 has made it impossible to meet face-to-face. Therefore, we’ve had to quickly adapt to meeting virtually using video conference tools. But to be honest the bigger impact has been on our in-house administration team who’ve had to adjust from all being together in Nationwide House to working remotely from home. I’m very proud of how Darren and his team have dealt with this challenge. And of course we have continued to monitor investments closely through what has been a tumultuous period for the markets and given the hedging I mentioned earlier the Fund was well-protected against the falls in interest rates that occurred.
We believe that education is the key here. Ensuring members are aware of the risks and pointing them in the right direction if they need help or support. Our evolving communication strategy has played a big part here. Be it the expansion of our Newsletter to cover more than a financial update for the Fund; our website which has a wealth of information on pensions, presented simply and in bite-sized chunks; or the Member Portal, which we launched a couple of years ago, that provides our members with key information, instantly online regarding their Fund benefits. Each plays its part in helping our members to better understand pensions and as a result hopefully avoid the risk associated with pension fraud.
At this time, I cannot tell you who will replace me. However, I can confirm we’re a long way through the process of appointing my successor and we expect to be able to confirm who that person will be in the next couple of months. This should then enable me to work with them over the final couple of months before I step down, to ensure both a smooth handover and provide them with the best possible start in the role.
Pete, thank you for your time today and all the very best in your future endeavours.
We also caught up with several of Pete’s colleagues and here’s what they said about Pete’s time as Chair.
Muir Matheson – Employer Nominated Director
“Pete as Chair has consistently shown fantastic personal leadership and energy on all challenges and issues that we have had to face over the last few years. He has always led from the front whilst always keen to listen to others and build a consensus.”
Catherine Redmond – Independent Trustee
“It’s really difficult to express Pete’s contribution in a short statement - but in summary I do think he has provided the Board with inspirational leadership and guidance.”
Sarah Garrett – Member Nominated Director
“Pete has been one of the most inclusive and patient Chairs I have ever had the pleasure of working with! He has taken time both in the meeting and informally to ensure points are fully understood and debated and the Board can move forward with an agreed approach. He will be missed.”
Mark Hedges – Chief Investment Officer
“Pete has provided great leadership; listening, challenging, being open to alternative views, setting a vision and applying an abiding sense of doing what is right for the Fund and its beneficiaries. It has been a great pleasure to help support him throughout his tenure.”
Vanessa Roberts – Fund Secretary
“Working with Pete has been a real pleasure. His ability to lead the Board through very technical discussions - ensuring everyone both understands the salient points and also gets an opportunity to ask questions and share their views - has been key to the successful management of the Fund. It’s also made my job as Secretary to the Fund much easier too!”
