Raising standards of trusteeship

We are creating new tools to encourage these engaged trustees, both professional and employer and member-nominated, to drive up standards even further. This is having a direct impact on our approach to education and enablement.

But equally clear is that some trustees are failing to meet the governance standards we expect and which we believe underpin the delivery of good member outcomes. 

So understanding why some trustees do not, or will not, engage with us is vital in deciding what we and the industry must do to ensure all members can benefit from well-run schemes.

We certainly cannot and will not ignore any segment of the trustee universe that may never display the sufficient skills, knowledge and effective governance to safeguard their members’ pension pots.

And then there is the question too of how, collectively, we should tackle the growing tail of closed schemes which will probably never meet the standards expected, yet in which increasing numbers of members and assets are trapped.

We are clear that we will take enforcement action, in particular where we see non-compliance with basic governance activities, such as completing a scheme return and a chair’s statement. These are often symptomatic of more significant governance shortcomings.

But it is also crucial that we do our best to reach out to poor-performing schemes to understand what is preventing them from improving, and how we, government and advisers can support them or perhaps, failing that, close them down.

New discussion paper

In the coming weeks we will publish a new discussion paper to open up these pressing issues for debate and to inform our own regulatory policy thinking.

The paper will set out how the Pensions Regulator’s 21^st century research has led to a far more targeted approach to educating and supporting trustees, and to segmenting the market by size, benefit type, risk profile and other relevant factors.

It will also call for the views of the industry on a variety of issues such as trustee training and qualifications, and how the problem of the growing tail of so-called ‘zombie’ schemes is best addressed.

This is not about imposing new standards on trustees, but ensuring they demonstrate that they meet the existing legal requirements. We will assess the effectiveness of our communication and enablement strategy to understand what resonates with trustees and what does not.

Ultimately we will need to consider other solutions that may be required, particularly if some schemes are not improving despite additional targeted support.

We look forward to a productive debate once the discussion paper is published.

Andrew Warwick-Thompson is executive director at The Pensions Regulator