The Pensions Regulator publishes report on governance survey

An in-depth survey into the way UK pension schemes are run found that while many schemes are well-governed, a 'significant minority' revealed shortcomings in important areas of good practice.

• Trustees confident in their ability to govern pension schemes
• Significant minority of schemes have shortcomings in specific areas
• Important link between training and governance
• Pensions Regulator to maintain efforts to improve governance
• Extensive work in this area already carried out

These findings from the first annual governance survey were published in a report today (Tuesday) by the Pensions Regulator as part of its commitment to improving the way pension schemes are governed.

Chief executive Tony Hobman said: "We have carried out a lot of work on helping to improve the way pension schemes are run but it is clear from this survey that we must not take our foot off the pedal.

"While the survey showed that many schemes are well governed it identified areas where we need to maintain our efforts to help schemes and their trustees plug the gaps in important areas of good practice."

Key findings from the survey were that:

• there are clear links between good governance, training and established risk management processes
• larger schemes are better governed than smaller schemes
• although not all big schemes are well-governed in every respect
• scheme trustees considered on the whole that they are performing well, and
• a significant minority of schemes have shortcomings in important areas.

Work already carried out by the Pensions Regulator in this area includes the development of free online learning and the introduction of codes of practice and guidance.

The survey among more than 1200 pension schemes throughout the UK will provide evidence on which the Pensions Regulator can base future work on improving scheme governance.

1. Copies of the Governance Survey can be found on the Pensions Regulator website at http://www.thepensionsregulator.gov.uk
2. t will be published annually. The survey was carried out on behalf of the regulator by RS Consulting and Critical Research. Representatives from 1235 schemes provided information in short interviews. Chairs, lay trustees and pension managers from 500 of these schemes took part in a full interview. The survey did not include all the schemes for which the Pensions Regulator has regulatory responsibility.
3. Shortcomings in good practice included:
   • 70 per cent of defined benefit schemes have no specific policy to manage conflicts of interest
   • 37 per cent of defined benefit schemes do not review sponsoring employers' credit rating
   • 20 per cent of all schemes with a main provider of administrative services have no service level agreement with their administrator.
4. A trustee is required to act in the best interests of the scheme beneficiaries, to act impartially, in line with the trust rules and prudently, responsibly and honestly.
5. Defined benefit company pensions pay you benefits based on your final salary (or an average of your salary for the last few years of your employment). Typically, the benefits will involve a lump sum and income for life.
6. The effect of a defined contribution scheme is similar to having a personal pension into which your employer makes contributions. Your benefits depend on what is put into the pension fund and how the investments perform. At retirement you can get a small part of the fund as a lump sum, while the remainder must be used to buy an annuity.
7. The Pensions Regulator is the regulator of work-based pensions. Our statutory objectives are to protect the benefits of members of work-based pensions; to reduce the risks of situations arising which may lead to calls on the Pension Protection Fund and to promote and improve the understanding of the good administration of work-based pension schemes.

• Andrew Winstone 01273 627752
• Amy Balchin 01273 627207
• Out of hours 01273 648496
• amediarelations@thepensionsregulator.gov.uk
• http://www.thepensionsregulator.gov.uk/

Non-press enquiries:

Customer support 0870 6063636
customersupport@thepensionsregulator.gov.uk