Proposals to reduce the number of poorly governed pension schemes have been outlined in a consultation launched by The Pensions Regulator (TPR) today.
The future of trusteeship and governance consultation outlines the problem of badly run pension schemes and considers how the trustee model can be made more effective.
In particular it poses questions to the industry about how to improve and evidence trustee knowledge and understanding, how to encourage diversity on boards, the role of accreditation and whether sole trustees are able to govern effectively.
David Fairs, Executive Director of Regulatory Policy, Analysis and Advice at TPR, said: “We believe all savers should be in well-run schemes that deliver good value. This paper outlines how we are considering changing the way we regulate to achieve that.
“The trustee model isn’t broken, but it does need to be greatly improved. There is stark evidence that the current system doesn’t work for all and there is a clear disparity between the experience of savers in well-run and badly-run schemes. If trustees cannot meet the standards we expect, we believe they should wind up and consolidate savers into a better run scheme.”
Questions posed to the pensions industry in the 30-page consultation include:
- Should there be an accredited professional trustee on every board?
- Are sole trustees on a pensions board able to run pension schemes appropriately?
- How can barriers to consolidation be removed?
- Should a legal requirement be brought in for trustees to meet minimum standards of knowledge and understanding and ongoing learning?
- How can diversity on pension scheme boards be improved?
Mr Fairs added: “Despite our work, including through initiatives like 21st Century Trusteeship, there is still a subset of disengaged trustees who either refuse or are unable to improve standards in their schemes.
“This clearly is not fair for savers - we believe that everyone saving for a pension should be in a scheme with excellent standards of governance and which is providing good outcomes for savers.”
The consultation will be open for 12 weeks, closing on 24 September. Responses can be submitted through the TPR website.
Notes for editors
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).