The GSK UK pension plans merged their three trustee boards into one as of October last year and will invite applications for three member-nominated trustee vacancies.   

The schemes of the pharmaceutical company announced in June 2023 that the three boards would be combined into one, the GSK Pension Plans Trustee Ltd. On 1 October, the legal side of the merger was completed.   

In the UK, GSK operates the GSK Pension Scheme, GSK Pension Fund, SmithKline Beecham Pension Plan, SmithKline Beecham Senior Executive Pension Plan and Glaxo Wellcome Contracted-out Money Purchase Scheme, which will now all be under a single trustee board.  

The GSK schemes said: “We remain fully confident that the trustee directors, along with their advisers, have the knowledge and experience to continue governing the GSK UK pension plans to a very high standard."  

They said the merger was “a natural evolution” of the previous governance arrangements, which already had joint sub-committees overseeing activities.  

“The united board will be more focussed and efficient than the current separate boards,” they added. 

The new board will consist of three member-nominated trustees, three employer-nominated trustees and three professional trustees. Until 31 May, the schemes will also have a fourth company-appointed trustee to assist with the transition plan.  

Later this year, the schemes will invite eligible members from all pension arrangements to apply for the three MNT positions on the new combined board, while the other seven trustees will be continuing in their role. 

Barry Mack, director at governance specialists Muse Advisory, said it is not uncommon for boards with the same scheme sponsor to be merged. 

 

This might be done, for example, because the company trustees are the same and it is more efficient for them to attend one longer meeting instead of separate meetings for each scheme. There will also be common agenda items between the schemes, such as the employer covenant, any presentation from the company about its prospects, as well as training and education for the trustees, he noted. 

 

In addition, some advisers and the administrator might be the same firms, meaning efficiencies can be found. Mack observes that while the lawyers usually need to be different, one of the firms is normally nominated to take the lead. 

  

These efficiencies lead to cost savings as advisers attend fewer meetings and less time is spent by support staff on producing meeting packs, he says. 

 

Mack adds that a trustee board merger “may be a precursor to scheme mergers, particularly if their funding levels are similar or there is a linkage between them in terms of benefits, e.g. staff and executive top-up schemes”.  

 

However, there are not just upsides – some risks can also arise, he warns. Conflicts of interest could arise and need to be managed, he says, for example where the call of one scheme on the employer’s covenant could be to the detriment of another scheme. 

 

Schemes could differ in terms of membership profile or funding position, and a single board might mean a “lack of appropriate focus on each scheme's risks”, Mack says. 

 

If the board merger is a precursor to merging the schemes, the trustees of each scheme will need to take advice for their scheme that is independent of the advice given to one of the other schemes, he stresses. This means each scheme will need its own actuaries and lawyers. He also cautions that the merged business “can be more difficult to handle if the schemes are materially different in their outlook”, such as their funding levels. 

What are the pros and cons of merging trustee boards?