Skip to main content
Press roomIn this
section

Raising the bar – what makes a good 21st century trustee?

Ref: PN16-37
Friday 22 July 2016

TPR unveils the next stage in its drive to improve pension scheme stewardship.

The Pensions Regulator has today published a discussion paper that continues the debate about how best to drive up standards of pensions trusteeship.

It outlines key findings and challenges from its research into the work of trustees, and asks trustees to answer key questions to shape future regulatory policy decisions.

While some pension scheme trustees manage their schemes efficiently and competently, many are not meeting the standards TPR expects, including requirements set out in legislation, which underpin effective stewardship and good member outcomes.

The 21st century trusteeship and governance discussion paper (PDF, 315kb, 27 pages) sets out what TPR is doing to educate and support trustees of both defined contribution and defined benefit schemes, and – drawing on the findings of TPR research in a number of key areas – considers what more could be done by TPR and the wider industry in support of raising standards.

Calling on the industry to respond with their ideas and views, Lesley Titcomb, Chief Executive at TPR, said:

“Trustees do a vital job safeguarding members' pension savings, many of them giving up their time voluntarily. Being a trustee carries significant responsibility – so it’s important that trustee boards display sufficient skills and knowledge, and follow effective stewardship principles. But good practice is far from universal and the challenges are particularly stark in smaller schemes.

“We want to reach out to trustees, understand the challenges they face and how best to educate and support them. But ultimately we’ll be asking about what’s preventing trustees from meeting the standards expected – and what should be done where, despite our best efforts, they are unable to get to that level?”

The discussion paper asks a number of questions including:

  • Should there be barriers to becoming a professional trustee in order to ensure consistent high standards amongst this group? For example, should all professional trustees be required to be qualified or registered by a professional body and undertake ongoing development?
  • How can we ensure that trustees are aware of, understand, and are able to apply, the Trustee Knowledge and Understanding (TKU) framework?

The research findings in the paper have already informed some of the education products produced by TPR, and will be used alongside other data to segment the market by size, benefit type, risk profile and other relevant factors and develop a more targeted approach to educating and supporting trustees. In particular, TPR will focus on disengaged trustees and trustees of poor performing schemes.

We invite written responses to the discussion paper by 9 September. We will review industry feedback and continue the dialogue during the autumn as we develop our 21st century trustee strategy.

TPR will continue to take enforcement action where necessary, including where it sees non-compliance with basic governance activities such as completing the scheme return and the chair’s statement, as these are potentially symptomatic of more significant shortcomings.

Andrew Warwick-Thompson, Executive Director of Regulatory Policy, added: “This is not about imposing new standards of governance. We will assess the effectiveness of our communications to understand what works and what doesn’t. We will also consider what solutions might be required, particularly if some trustees are not improving despite additional targeted support.”

Editor's notes

  1. TPR commissioned two pieces of research to better understand trustees' ability to fulfill governance and administration roles in an increasingly complex pension environment.
  2. In the quantitative research (PDF, 4071kb, 122 pages), published in October 2015, TPR carried out 800 in-depth interviews between March and May 2015 with trustees from DB, DC and hybrid pension schemes with at least 12 members.
  3. TPR followed this up with qualitative research (PDF, 1003kb, 47 pages) which is published today alongside the discussion paper. The research consisted of 30 in-depth interviews with scheme trustees, to deepen our understanding of some of the issues identified in the first phase of research, with regards to the structures and processes that promote the effective operation of trustee boards, particularly on the role of the Chair, and the best way to deploy training and support tools to achieve effective trusteeship across schemes of all sizes and benefit structures.
  4. TPR is the regulator of work-based pension schemes in the UK. Our statutory objectives are: to protect members’ benefits; to reduce the risk of calls on the Pension Protection Fund (PPF); to promote, and to improve understanding of, the good administration of work-based pension schemes; to maximise employer compliance with automatic enrolment duties; and to minimise any adverse impact on the sustainable growth of an employer (in relation to the exercise of TPR’s functions under Part 3 of the Pensions Act 2004 only).

Press contacts

Tim Marks 01273 662092

pressoffice@thepensionsregulator.gov.uk

home.press_room.press_releases.2016.raising_the_bar_–_what_makes_a_good_21st_century_trustee.page