Laura Andrikopoulos, Head of Governance, Hymans Robertson says: “We welcome TPRs review of Trustee Knowledge and Understanding and particularly the acknowledgement that requirements differ for different types of scheme, such as DB and DC. I’m pleased to see that TPR has not gone for a mandatory qualification or hours-counting requirement for lay trustees, although the 15 hours expectation seems a reasonable guide. The campaign to employers, helping them understand the benefits of the trustee role and how they can support trustee recruitment, will also help to counteract the difficulties many boards are finding in fulfilling trustee positions. Company HR departments often have more success with making trusteeship seem an attractive career development opportunity.
“The industry group on board diversity is welcome and very much needed – the pensions industry has been slow to recognise the empirical evidence that diverse boards are higher performing boards. It is unsurprising that professional trustees will not be mandatory on boards at this time, given the supply issues in the market. We encourage boards to regularly test however, as part of their annual effectiveness assessment, whether a professional trustee is required.”
Darren Philp, Director of Policy and Communications at Smart Pension, said: “This is an important activity by the Regulator which will hopefully lead to higher standards across all occupational pension schemes and better outcomes for members.
“The Regulator is rightly raising the bar and asking schemes to up their game. It could - and maybe should - have gone further, including introducing a new requirement for professional trustees on every board to up the pace of improvement, but the direction of travel is now clear, and all schemes will need to either shape up or ship out.
“Requirements to improve knowledge and understanding and to improve the diversity of trustee boards are both timely and necessary to ensure all trustees have the skills to effectively steward the pension savings of their members.
“The Regulator stresses that there are well-run smaller schemes out there, and these can perform for members provided that the employer is committed to the scheme and has made adequate resources available to do things properly. However, all too often this isn’t the case and too many smaller schemes suffer from poor governance. Again the Regulator is stressing it will act if these schemes fail to raise standards.”
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