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19 August 2019

The Pensions Regulator publishes consultation on the future of trusteeship and governance

The Pensions Regulator (TPR) has published a consultation on the future of trusteeship and governance. This sets out TPR’s proposals in three key areas: enhancing trustees’ knowledge and skills and ensuring ongoing learning and development; improving scheme governance structures; and removing barriers to defined contribution scheme consolidation. By enforcing changes in these areas, TPR aims to ensure that trustees of poorly managed schemes must act to improve governance standards, and that where the expected standards are not being met, consolidation of pension schemes can be accelerated in order to protect members.

Key questions raised in the consultation include:

  • whether to introduce a requirement for an accredited professional trustee to sit on every board;
  • whether sole trustees are able to run pension schemes appropriately, for example, as regards the management of conflicts and governance standards;
  • requesting views on the role of professional trustee firms and on the pros and cons of different corporate trustee models;
  • whether trustees should be subject to a minimum legal standard of knowledge, understanding and ongoing learning, for example, by means of a qualification or set targets for continuing education;
  • how to improve the way TPR communicates with advisers and service providers, and remove barriers to consultation;
  • how to improve the effectiveness of TPR’s educational materials in order to improve governance standards, particularly for trustees of smaller schemes;
  • whether to introduce a new requirement for schemes to report to TPR on the steps they are taking to ensure board diversity; and
  • how TPR can support defined contribution schemes to consolidate in order to improve quality.

The consultation also sets out some of TPR’s ongoing efforts to improve compliance through supervision, enforcement, and raising administrative standards, for example, by means of formal improvement notices and implementing regulatory initiatives on investment governance, trustee knowledge, record-keeping, costs and charges. It is clear that TPR envisages that trustees who cannot run schemes effectively will have to wind up and consolidate their scheme in order to protect members, and that there will be fewer, but better governed schemes in the market. Responses to the consultation must be submitted by 24 September 2019.

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