I was planning on writing about trustee education before Michael Gove was moved on from the Department for Education but the timing of his departure and this note is purely coincidental!

ThinkingWhen we looked at the Pensions Regulator’s overview of the new Trustee Toolkit https://trusteetoolkit.thepensionsregulator.gov.uk (the e-learning tool which has become the baseline standard of trustee education) it struck us that there does not as yet seem to be anything about how trustees deal with the question of valuing the employer’s covenant. Since in our view as an independent trustee the first thing to understand after the ink is dry on the appointment letter is to understand the sponsoring employer’s covenant, the absence of this from the Trustee Toolkit seems odd.

We were pleased to see that the new investment module looks at investment in a pension scheme, setting an investment strategy, types of assets including alternative asset types, risk and reward, economic cycles, suitability and diversification, costs and charges, active and passive fund management and reviewing investments. Disappointingly, there does not seem to be any mention of fiduciary management, which if so, we believe is a major omission.

The question remains – how do you get trustees trained and able to meet the Pensions Regulators Knowledge and Understanding standard? Trustees are human after all and we all absorb information and learn stuff very differently.  We have personal experience of different E-Learning tools and for some people they are great and for others the lack of interaction makes it less successful. ‘Just in Time’ training is often used, for example just before a scheme valuation. Then time is spent explaining the process, the different valuation numbers calculated and the reasons for them and overall is often a valuable use of that most precious of resources – time.

There is often talk about having trustee training at the beginning of each meeting. The idea is sound but the discipline of building this into the agenda for each meeting can make it a challenge. Having advisers come along to do specific training items can be helpful as can other providers in a particular space. Here a careful balance has to be struck by non scheme advisers in educating trustees and marketing to them.

Trustees have a personal responsibility to ensure that they receive the training they need although some find speaking up to say so as something to be ashamed of rather than a sign of confidence in flagging a gap in their understanding.

The increasing complexity of pension regulation, issues and potential solutions increases the burden on trustees – and let’s not even think about European Commission directive IORP II adds to the regulatory load. For some trustees, the increasing responsibilities mean that they are no longer prepared to stand again and that potential trustees are not prepared to put themselves forward.

If this is something you think an independent trustee from CBC could help with this by hitting the ground running on their appointment you are absolutely right. But i would say wouldn’t I?

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