Governance – Do you meet the standards of the Pensions Regulator?

Apr 16, 2018

The Pensions Regulator is really hot on scheme governance, to the extent that in 2016 they produced a discussion paper on 21st century trusteeship and governance. This explored how trustee standards could be raised and how to improve the way pension schemes are managed.

Good governance is about having motivated, knowledgeable and skilled trustees in place. It’s also about having the right structures and processes to enable effective, timely decisions and risk management, and to provide clear scheme objectives. As trustees, that’s what we look to develop on boards where we sit.

Given there is a clear link between good governance and good fund performance it’s an essential part of effective scheme management.

What does good governance it look like?

In our experience as trustees we believe that there are 11 different areas to look at. Before you stop reading here we’ll look at two in this article and then cover the remaining areas in subsequent articles.

 1. Trustee Business Plan

Have you got a Trustee Business Plan?
This outlines your vision and ties into the company strategy to ensure there is alignment between the two.

We covered what goes into your plan in our article on the 6th March but the key areas to cover include:

– Vision and goals
– Objectives and actions (to reach your goals)
– Governance
– Compliance
– Funding/Investment strategy
– Risk Management
– Sponsor Relationships
– Member experience and engagement
– Costs

2.  Having a scheme risk register

The risk register documents the key risks for your pension scheme. The trick in our experience is to identify the ones you can control vs the ones you can’t – to ensure you have risk management strategies in place for them.

There are four key steps to your risk register :

Identifying the risks 

What are all the areas that could cause your pension scheme to be in jeopardy. They should all be recorded in a risk register. Examples include – Conflicts of interest, pension funding not keeping up with requirements, poor investment strategy, lack of knowledge of the trustees, the sponsor going bankrupt, cyber risk – e.g. loss of data and so on.If you haven’t already got one establishing a governance structure to achieve long term goals, managing training and development of trustees and board evaluation.

Evaluating the risks

Having identified them you need to classify them by how likely they are to happen and what the impact of that risk happening is.

Managing the risks

Having identified and classified them, you will next need to identify the actions or controls you are going to put in place to mitigate the risks. If for example you are worried about a conflict of risk, you may want to have actions that include creating a conflict of interest policy and guidelines for managing them.

It’s important at this stage to assign someone to manage each of the actions to ensure they have an owner responsible for them.


Your risk register should be regularly reviewed – ideally at each of your trustee board meetings, so you can check on progress with the actions outlined above.
And then the risks themselves should be reviewed at least annually to ensure they are still relevant.

There are various risk management tools that can help collect and manage your risks. A list of applications can be found here

The nine other areas which make up good scheme governance are

– Conflicts of interest policy
– Gifts and hospitality policy
– Trustee training log individual
– Trustee training log
– Trustee board
– Timetable of advisers review
– Review of employer covenant
– Scheme investment strategy last discussed with employer
– Assessment of Trustee board performance

We will look at these in more detail in future articles.

The Pensions Regulator has provided some useful tools and a video on good governance which you can find here
Handy guide to risk management can be found here
And a check list here
In the meantime, if you’d like to assess how good your scheme governance is now – you can take our test here

People who read this blog also read this case study

Scheme Governance



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