As part of its 21st century trustee initiative, The Pensions Regulator (TPR) has clarified its expectations by publishing a revised description of a professional trustee for consultation.
TPR’s initiative seeks to raise standards of governance and administration to protect member benefits by being clearer about what it expects trustees to do, and being swifter to take action where standards are not met.
In response to TPR’s discussion paper and conversations with the industry, trustees asked TPR to be clear about which trustees would be held to higher standards and how that applied to the fines that may be levied on them.
The consultation on TPR’s draft monetary penalties policy will run from 23 March for six weeks.
Executive Director for Regulatory Policy at TPR, Andrew Warwick-Thompson said: “By consulting on our monetary penalties policy we are inviting views on our approach to applying fines on trustees and other scheme managers, but we are also sending a clear message that we are getting tougher on poor governance.
“We want trustees to understand that action may be taken where they fall short of expectations. We have shown that we will act where trustees are not complying even with their basic duties.”
Today’s consultation also invites comments on our revised description of professional trustees. Previous responses to TPR’s 21st century trustee discussion paper included comments regarding the definition of a professional trustee and requests for further clarification.
Professional trustees have a higher duty of care to members and we will be looking at how this higher standard can be made clearer. TPR considers a professional trustee to include any person, whether or not incorporated, who:
- acts as a trustee of the scheme in the course of the business of being a trustee
- or is an expert, or holds themselves out as an expert, in trustee matters generally
Mr Warwick-Thompson said: “We are leading an open and extensive debate on standards of trusteeship and today’s consultation is an important part of the package we are developing that will continue to clarify our expectations of trustees, when we will act and where standards should improve.
“Our 21st century trustee strategy is seen by us as key to meeting our regulatory objectives. Good governance is essential to pension schemes delivering good member outcomes. This is why we and the industry support improving standards of trusteeship. We will announce further parts of the package and future plans in the coming weeks.”
- The draft monetary penalties policy is relevant to any trustee, manager, employer, adviser or other person who we may issue with a monetary penalty for contravening pensions legislation, including those involved with public service pension schemes.
- TPR recently undertook a survey with the professional trustee community to understand the diversity of business models and numbers of individual professional trustees that make up the community. Data from the survey will help inform the 21st century trustee strategy.
- A full list of the discussion questions in the 21st century trustee discussion paper is included in appendix 1 of the response (PDF, 105kb, 20 pages).
- A full list of the respondents to the 21st century discussion paper is included in appendix 2 of the response (PDF, 105kb, 20 pages).
- 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 the regulator’s functions under Part 3 of the Pensions Act 2004 only).