Pensions are continuing to change and show no sign of slowing down. tPR ‘’our friends in Brighton’’ have been busy explaining how it intends to promote its thinking about trusteeship and has issued a discussion paper – ‘21st Century Trusteeship and Governance’
The tPR is serious about improving scheme governance – ‘it is unacceptable that some members are at greater risk of poor outcomes in later life purely because they happen to have been employed by an employer with a poorly run pension scheme’
It’s a sentiment we strongly agree with.
The focus of the report was aimed at what actions should be taken to ensure that trustee boards run the most effective pension schemes, maximising the benefits for the scheme members without compromising the business. The main findings were as follows:
- CPD is more relevant than formal qualifications
But a formal process was not favoured. A voluntary take up of existing CPD frameworks or encouraging trustees to have the right framework to facilitate regular training was preferred.
- The Trustee toolkit shouldn’t be mandatory
Whilst they felt the Trustee toolkit was useful they felt it wasn’t flexible enough as it doesn’t always take into account the differences in schemes.
- Professional trustees
Respondents felt that there should be barriers to entry for professional trustees. That they should ‘uphold higher standards and be able to demonstrate their expertise’.
We wholeheartedly endorse this viewpoint at CBC. Our maintenance of professional standards is absolutely key to us. We keep up to date to ensure that the schemes where we are trustees get the best and most appropriate advice.
The challenge with this is to establish what the minimum standards should be and also who should be responsible for administering it. And the report shows that respondents are against formal requirements. We think this watering down is a missed opportunity. The Cadbury Commission back in 1992 set the standards for corporate life which have been built on since then. We see this as the minimum standards which should be expected of Trustee Boards.
They went on to examine what solutions there were to raising standards of trusteeships with the following four being the key ones:
- Robust selection process – making sure of exactly what is needed and matching that to the right individual.
- Having an effective chair – strong leadership is key.
- Board evaluation – ensuring standards are kept and to review effectiveness and address weak areas in an on-going manner.
- Greater transparency and accountability through effective reporting.
What help is available?
Our friends in Brighton have produced six ‘how to’ guides for DC schemes. These give a clear view of tPR’s view on how trustees should operate in the 21st century and as such they are essential reading for all trustees. In essence trustees need to focus on:
- Trustee board competence – with a greater focus on skills and acquiring the necessary level of training to achieve this
- Clarity of roles – balance of powers and accountability of all the trustee board and their advisers and service providers
- Developing and maintaining effective governance structures and processes
- Developing and maintaining a business plan, including succession planning
tPR has indicated that smaller schemes are a source of more concern than larger ones as they may suffer a lack of resource and support to help them achieve the standards which are now being set. We have a particular focus on these schemes and how these goals can be achieved within the budgets (both time and money) under which they are working.
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If you would like an assessment of your trustee board, or have any questions about we are working on boards with these issues , please call on 0845 4334 199 or email us at email@example.com