Pensions industry supports effort to boost trustee knowledge and understanding

Following a 12-week consultation on the draft revised trustee knowledge and understanding (TKU) code of practice and scope guidance, the Pensions Regulator has found widespread support of the TKU regime.

The responses demonstrated the extent to which the regime has become embedded in normal trustee activities since it was implemented in 2006. We were pleased to see that most respondents were supportive of the TKU regime and acknowledged the positive change it has made in the confidence with which trustees now approach their responsibilities.

Despite some early concern about our increasing expectations of trustees, most respondents recognised that the requirements have not changed substantially and, as such, the revised code and scope have not substantially changed either.

A lot of feedback was also given about the Trustee toolkit. Some respondents commented that the toolkit should be complemented by scheme specific training given by an appropriate adviser or industry trainer. This is consistent with our view that different requirements will be appropriate for trustees of different types of schemes. Our view is that scheme specific learning would be of greater value if it were pitched at an audience who were at a 'post toolkit' level.

The draft revised code also recognises the unique requirements of trustees of very small defined contribution schemes, with 12-99 members, and we have developed slimmed down guidance for this group. This was consulted on within this exercise. Trustees of schemes with less than 12 members remain exempt from the requirements.

Pensions Regulator chief executive, Tony Hobman says: “We are delighted to see so much positive feedback on the TKU code. It is particularly heartening to hear an acknowledgement of the change in the confidence with which trustees now approach their responsibilities. Some areas for improvement were suggested and we have taken these on board, but there is no evidence that fundamental change is needed to the text on which we consulted.”

The draft revised code is laid before parliament and the Northern Ireland Assembly and it is expected that the revised code will come into effect later in this year.

1. To view the full consultation report visit the regulators website.
2. The Pensions Regulator is the regulator of work-based pension schemes in the UK, with objectives to protect members' benefits, promote good administration and reduce the risk of calls on the Pension Protection Fund. Our approach is risk-based focusing on education and enablement, with enforcement where appropriate. We have the ability to:
   • collect information about pension schemes; through scheme returns, under the scheme funding regime and as well as statutory (including whistleblowing) reports;
   • issue notices requiring actions to tackle non-compliance, prohibit trustees who are judged not fit and proper to carry out their duties or appoint independent trustees;
   • direct pension schemes as to how to calculate their liabilities and the contributions required;
   • issue a contribution notice where there is an attempt to avoid liabilities, or a financial support direction where the employer is a service company or insufficiently resourced.

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