In response to the Pensions Regulator’s consultation on the future of trusteeship and governance, the Pensions Management Institute (PMI) remains fully supportive of all measures that improve standards across the industry. In particular, the PMI would like to see:
1. Mandatory accreditation of all professional trustees within five years.
2. the introduction of tougher regulations requiring a ‘sole trustee’ to be a company, rather than an individual.
3. Professional trustees should be held to higher levels of professionalism and training.
In a recent survey[1], the majority (89%) of PMI members surveyed agreed that TPR should set higher expectations of trustee knowledge and understanding for professional trustees, while 69% of respondents thought that there should be legislative change to introduce a minimum level of ongoing learning for all trustees, such as CPD-style training. Furthermore, almost two thirds (62%) of respondents indicated their support for legislative change that would require trustees to demonstrate a minimum level of knowledge and understanding via training and qualifications.
In line with Schedule 3 of The Pensions Regulator’s “Standards for professional trustees of occupational pension schemes, ”[2] the PMI would welcome tougher regulations around sole trusteeship believing that a ‘sole trustee’ should be a company, rather than an individual, and that sole traders should not provide sole trusteeship services in isolation. For representatives, mandatory accreditation should take place within six months. 48% of those polled felt that it was not possible to achieve real board diversity with the sole trusteeship model.
Almost all (82%) PMI members think that governance standards for sole trustees should be strengthened through new regulations, such as requiring two or more trustees to attend trustee meetings. Moreover, 58% think that trustee directors of firms providing sole trusteeship services should be required to demonstrate higher professional standards than those of other professional trustees.
The question of whether or not a professional trustee should be appointed to every pension scheme needs to be considered more broadly with key issues such as cost and lack of capacity weighed up against the anticipated improvements to governance. Currently 43% of PMI members surveyed believe that it should be mandatory for there to be a professional trustee on every board with 57% believing it should not be required.
Lesley Carline, President, Pensions Management Institute, commented: “Questions clearly remain over whether a professional trustee should be present on every board, and there are still many pros and cons to consider. Although it is generally accepted that the introduction of professional trustee standards will bring about huge improvements, it could lead to increased scheme costs and capacity issues, resulting in a reduction of professional trustees on the market and a drive towards consolidation.
“While it will take time for the industry to adapt, we would like see to the mandatory accreditation of professional trustees within five years. It has never been more important for those running our schemes to be fully equipped with all the necessary skills and tools, in order to do their jobs to the best of their ability. As industry professionals, it is within all of our interests to strive for improved governance standards and drive better outcomes for members.”
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