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The definition of governance is "the articulation of objectives and the implementation of a framework of principles, guidelines and processes to ensure there is management of key risks and appropriate assignment of responsibility to deliver the desired level of control globally".

The governance of pension schemes has become increasingly costly and burdensome. With the increased volatility of deficits over recent years, and an increasing focus on controlling pension costs and risks, managing the overall governance of the pension fund’s assets and liabilities is more vital today than ever.

To address this challenge, many schemes and employers have in recent years looked to outsource some or all of that governance, in order to improve its quality and efficiency and reduce costs. There are three primary drivers for undertaking governance of a pension scheme:

  • risk management (ensuring the plan does not break the law or expose the sponsor, member or fiduciary to undue risk)
  • maximising the impact for the sponsor (ensuring that the plan sponsor gets a reasonable return on its pension spend)
  • maximising member outcome.

Mercer’s 2013 Pensions Governance Survey  provides one of the most comprehensive insights into the running of pension schemes in the UK. There were 197 participating schemes, representing over 1,000 trustees. Find out their thoughts around running pension schemes in the UK, and the importance of governance.