- TPR publishes response to Future of Trusteeship and Governance consultation
- Date: Monday 10 February 2020
NEW measures have been announced by The Pensions Regulator to protect savers and improve member outcomes by ensuring they are in well run schemes able to deliver good value.
The action comes as TPR publishes its response (click here) to its consultation on the future of trusteeship and governance.
A record 114 written responses were submitted during the consultation highlighting broad support for TPR’s view that all savers should benefit from efficient and well run pensions, with the right people in place to make good investment decisions and deliver value for money.
Crucial to this is the need for trustees to constantly review and develop their knowledge and skills and to improve diversity and inclusion on trustee boards.
As a result, TPR will now review and update its Trustee Knowledge and Understanding code of practice and review the trustee toolkit to make its expectations clearer and to drive up standards of trusteeship. Once the new standards are in place, TPR plans to run a regulatory initiative to test levels of trustee knowledge and understanding, and to consider appropriate action where they fall below expectations.
On diversity, TPR will establish and lead an industry working group to find ways of supporting schemes to take steps to improve trustee diversity.
The consultation also asked if it should it be mandatory for pension scheme boards to engage a professional trustee and if governance standards for sole trustees should be strengthened.
In both areas, TPR will not immediately push for new measures but will instead support the APPT’s standards and the upcoming industry accreditation framework for professional trustees. TPR are also supportive of APPT’s intention to develop an industry code for sole trusteeship.
David Fairs, Executive Director of Policy at TPR, said: “It is clear there is strong support from the industry for a collaborative approach to improving governance standards to protect savers and member outcomes.
“The route to achieving this goal is driving up standards across all schemes, but particularly in small and micro schemes that our research shows tend to have poor governance; we will encourage consolidation where trustees are unwilling or unable to improve governance to the required standards. Vital to this will be boosting knowledge and understanding and ensuring trustee boards have a diverse make up to make the best decisions for members.
“We have listened carefully to what the industry has told us, and we are not at this stage going to introduce new measures in areas such as sole trusteeship and adding a professional trustee to boards.
“However, we will continue to monitor standards closely to ensure our expectations for scheme governance are met, and that the right action is taken where schemes do not improve. Only in this way, and by working with industry bodies, can we ensure savers are adequately protected.”
The consultation also generated extensive views on consolidation in the Defined Contribution market. TPR will continue to monitor DC consolidation activity and work with both industry and the DWP to find solutions to overcome barriers to consolidation.
The response makes clear TPR will not take a ‘blanket approach’ to consolidation. If a scheme is well run and can demonstrate that it is offering value for members, TPR would not expect the trustees to consolidate.