Proposed trusteeship diploma gets mixed response
The Pensions Management Institute and the Association of Professional Pension Trustees have announced the launch of a joint consultation to introduce a Diploma in Pension Trusteeship to improve trustee education and standards of scheme governance.
In a joint statement, the PMI and the APPT explained that as trustees face tighter regulations and more complex responsibilities, they will require a benchmark to demonstrate they are qualified to fulfil their duties.
There ought to be a mandatory element to all lay trustees’ training
As such, they want to create a diploma that will be a qualification in its own right. To date, the only trustee qualification in the UK is entry-level: the Award for Pension Trusteeship was introduced by the APPT in 2006.
While the proposed diploma is aimed primarily at professional trustees, it will be open to all categories of trustee wishing to show evidence of their competence to regulators and prospective clients. The Pensions Regulator has endorsed the initiative.
Make talent identifiable
Neil Scott, head of professional standards at the PMI, said the diploma will be “the only one that captures the skills of a trustee”, such as prioritisation and legal knowledge, which he called “anomalous, considering trustees’ roles and responsibilities”.
Gareth Tancred, chief executive at the PMI, added that the diploma “makes individuals [with the requisite skills] easier to identify”, empowering schemes to make informed appointments.
Nita Tinn, a professional trustee at Independent Trustee Services and a member of the APPT working group, highlighted the necessity of this qualification. “At the moment, anyone can set up as a professional trustee,” she said, as there is no standard by which to evaluate and distinguish competence levels.
She added that the APPT and the PMI hope that once the diploma is live, a list of trustees who achieve the qualification will be made publicly available, for example on the regulator’s website.
Nick Boyes, an independent trustee, said more formality in trustee certification would be “a good idea”, as adopting the title of trustee naturally leads clients to make assumptions. “If you’re charging a fee, a client has a right to expect a certain depth of knowledge,” he explained.
'One size fits all' won’t work
While the diploma is targeted primarily at professional trustees, the regulator expects uptake among lay trustees, too. However, John Paradise, a member-nominated trustee and committee member at the Association of Member Nominated Trustees, warns against taking what he called a one-size-fits-all approach.
He said that if equally stringent requirements became mandatory for lay trustees as well as professional ones it would stifle the sector, as lay trustees’ backgrounds are so varied.
However, Paradise admitted: “There ought to be a mandatory element to all lay trustees’ training.” He pointed out that most complete the Trustee Toolkit, and that the AMNT is strongly recommending the Award for Pension Trusteeship.
Paradise added that the proposed new diploma should only target professional trustees, and said a separate, lay trustee-specific qualification should be introduced for best results.
He said the regulator should be giving more tailored advice and criticism for lay and professional trustees, rather than “generalised criticism across the whole sector”.
Higher regulatory expectations
The regulator has welcomed the initiative, as it dovetails with its sharper focus on scheme governance and trusteeship following a report it published last year, which demonstrated significant knowledge gaps among trustees in both defined benefit and defined contribution schemes.
Andrew Warwick-Thompson, executive director for regulatory policy at the regulator, said: “We expect higher standards of professional trustees, and this qualification would help professional trustees demonstrate their knowledge and commitment.”
This week the regulator issued its first fine to a scheme that had failed to meet the new statutory requirement of preparing an annual governance statement, further underlining its campaign to improve trusteeship standards.
Warwick-Thompson made the regulator’s position clear, stating: “We will act where trustees demonstrate that they are not meeting even the basic ‘hygiene’ duties we expect.”
The PMI-APPT working group aims to collect all feedback on its initial proposal by August 3 2016, based on which it will then make amendments. It hopes to launch the diploma by autumn 2016.