Code of practice 07
Trustee knowledge and understanding (TKU)
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Acquiring knowledge and understanding
- The regulator expects that even the most experienced trustees will need to undertake some learning because of the many changes currently taking place in the provision of pension arrangements and because the provisions of the Pensions Act 2004 place new demands upon them. That is why the regulator is providing a learning programme which will be free and is inviting all trustees to register for it.
- Any learning programme offered by the regulator will allow trustees to omit those matters on which they are confident and to concentrate on those new matters quickly and conveniently. If trustees have another plan for their learning, they are still invited to log on to the regulator's trustee learning portal so that they can be alerted to further voluntary learning activities as they come on stream and can participate in them if they wish.
- The knowledge and understanding regime will be implemented on 6 April 2006. At that time, there will be many existing trustees who have not had the opportunity for learning at all and many others who have had induction training but nothing beyond that. Yet other trustees will recognise that they have fallen behind with their learning in some areas or that they have new needs in the light of recent legislation and other changes in the world of pensions. For this reason, and as a general rule, the regulator will allow six months from implementation for existing trustees to complete a learning programme which meets their needs.
- Newly-appointed trustees with little or no prior knowledge and understanding are likely to find that they need to acquire the full range of knowledge, and to develop their understanding, relevant to their role and their scheme, omitting only those areas where they may have specific expertise (e.g. fund management).
- For newly-appointed individual lay trustees and lay directors of corporate trustees these particular requirements for knowledge and understanding and to be conversant with scheme documents will not apply for a period of six months from the date of appointment as trustee to a scheme.4 This is designed to give new individual lay trustees and directors the time to acquire the necessary knowledge and understanding.
- Notwithstanding the above, the precise time allowed may well be determined by the timing of trustee meetings. Even a new trustee must be equipped to make the decisions with which he or she might be faced. New trustees may find they need to prioritise their learning according to the agenda of the early trustee meetings which they attend.
- The regulator will take this time limit into account in the design of any learning programme which it publishes. It will expect that learning providers will do the same.
- Newly-appointed lay trustees are advised to start immediately to acquire the appropriate knowledge and understanding (including familiarising themselves with the scheme's trust deed, rules and relevant documents). Some schemes may offer pre-appointment training and this good practice should be encouraged although it is voluntary. Others may arrange for mentoring of new trustees by experienced ones and this is a very useful practice of which the regulator could only approve although, again, it is voluntary.
- Although the legislative requirements on knowledge and understanding and the requirement to be conversant with certain scheme documents does not apply to lay trustees for the first six months of their appointment, these new trustees remain accountable in law for any decisions that they and their fellow trustees take during this time. The regime above has attempted to deal with this issue but trustees may find other pragmatic solutions to help them through the early months. It would be as well to keep a record of those.
4. See The Occupational Pension Schemes (Trustees' Knowledge and Understanding) Regulations 2006
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