Two employers have explained how they make sure trustees are regularly trained, after a Pensions Regulator survey shows half of schemes do not have a training plan.
Fifty per cent of schemes have a training plan in place for trustees, slightly up from 48 per cent in 2013, according to scheme governance research conducted for the regulator by independent market research organisation GfK Financial.
We have a document for them to complete and say what training they’ve been to and what issues they have
Steven Robson, United Utilities
Forty-five per cent of schemes said all trustees possess the level of knowledge and understanding set out in the regulator’s trustee knowledge and understanding code of practice.
Water company United Utilities requires all trustees of its defined contribution and defined benefit schemes, to complete the regulator's TKU code of practice as a condition of entering into the role.
“It’s a good way of getting the knowledge up quite quickly,” said head of pensions Steven Robson. The scheme also encourages trustees to attain a trusteeship certificate from the Pensions Management Institute.
As part of the scheme’s annual meeting it reviews the training completed by trustees and identifies the training needs of individuals on the board, Robson said.
“We have a document for them to complete and say what training they’ve been to and what issues they have,” he said.
The scheme will also organise sessions to educate trustees about upcoming issues that have been identified, such as the cessation of contracting out in 2016.
These will be led by the scheme’s lawyer, its investment manager or adviser, Robson said.
Defence company Finmeccanica is the sponsor of the Selex Pension Scheme, which requires all trustees to complete two days' training annually, and to have completed the regulator's trustee toolkit.
“We provide one day in terms of a training session we put on,” said Mike Nixon, head of pensions at Finmeccanica.
Trustees are encouraged to spend the second day attending external conferences or reading regulatory material.
Mixed bag
Larger schemes generally have some form of training policy in place, but this might not always be linked to the regulator’s TKU code, said Rosanne Corbett, senior associate at consultancy Muse Advisory.
“They will have thought about their training needs based on what they’re trying to achieve in the short term and what’s coming up on the agenda in the next year,” said Corbett.
Only 39 per cent of schemes in the regulator's survey said they have a documented policy on trustee knowledge and understanding.
Documenting the training policy for trustees makes good governance practice, said Corbett.
“It’s really important that any new trustee coming onto the board understands what’s required of them, not just from a regulatory point of view but from the scheme’s point of view,” she said.
The regulator's executive director for defined contribution Andrew Warwick-Thompson said it was considering whether to introduce a formal qualification for independent and chair trustees.
However, this has not been unanimously welcomed. “The danger is around going into a tickbox culture,” said Nixon.
But Corbett agreed independent trustees and chairs might need a higher level of expertise when compared with lay trustees, since they may be required to have a broader range of skills.
“Some people might have investment expertise, but won’t necessarily have the skills to chair effectively,” she said.
