Paperwork burden causes 'ineffective' member communications

A survey of 80 schemes by PricewaterhouseCoopers (PwC) shows many are subsequently failing to meet the Pensions Regulator’s 'trustee knowledge and understanding' (TKU) targets.

The code of practice requires trustees to be able to demonstrate they understand a variety of issues, including the regulations governing them, the nature of their covenant agreements and the advice they receive from their consultants.

According to PwC’s results, 33% have done TKU assessments and identified gaps but taken no steps to close them in the past 12 months – an increase of 30% on last year’s survey.

Heidi Johnson, a director in PwC’s pensions assurance practice, said: “Our survey has revealed many areas where trustees have shown a real improvement in their governance over the past two years.

“However, significant challenges remain, not least with the quantum of information trustees have to wrestle with and the limited time they have to do so.”

There was also evidence of trustees lacking adequate help from their sponsors, with 26% having no access to “decision-makers” at their sponsors.

The survey also revealed weaknesses in member communications.

A third of trustee boards admit they do not give sufficient information to members; 31% described their communications strategy as not “proactive and effective” and 44% do not ask for member feedback “at all”.

Meanwhile, only 22% of defined contribution scheme trustees believe the information they give members allows them to make “informed investment decisions”.

Johnson said: “Trustees are grappling with how to communicate effectively with members to improve engagement, without significantly increasing costs.”

Pan Trustees chairman Steve Delo sympathised with trustee concerns about communication, saying requirements for things they have to convey to members makes it hard to issue “intelligible” communications.

But he warned the TKU figures were a sign “UK pensions are falling well short on embracing training in the right sort of way”, while trustees “dramatically underestimate the importance of education”.