The Pensions Regulator is consulting on proposals to make it mandatory for a professional trustee to sit on every trustee board, in a bid to ramp up standards and drive consolidation.
A consultation paper published on Tuesday reveals that the watchdog is also considering whether sole trustees on a board should be permitted, as well as whether trustees should meet minimum standards of knowledge and understanding and ongoing learning.
Commenting on the consultation paper, David Fairs, executive director of regulatory policy, analysis and advice at TPR, said: “The trustee model isn’t broken, but it does need to be greatly improved. There is stark evidence that the current system doesn’t work for all and there is a clear disparity between the experience of savers in well-run and badly-run schemes."
Reaching disengaged trustees is really challenging because when we send them emails many of them delete them without even reading them
David Fairs, the Pensions Regulator
“If trustees cannot meet the standards we expect, we believe they should wind up and consolidate savers into a better run scheme,” he added.
Elaborating in a separate blog entitled “Why we’re pushing schemes out of the market”, Mr Fairs wrote: “Many smaller schemes are simply not good enough. Trustees are either asleep at the wheel or not taking their responsibilities seriously and as a result the governance of some schemes is, frankly, breaching the law.”
He said: “Reaching disengaged trustees is really challenging because when we send them emails many of them delete them without even reading them.”
Diversity reports could be introduced
Respondents to the consultation will be asked whether they agree on minimum standards for trustee knowledge, and whether they should be enforced by a continuing professional development regime.
The regulator also floats the idea of requiring schemes to report on how they ensure diversity on their boards.
Mr Fairs said: “We are asking quite specific questions about particular elements of running a scheme that might be indicators of poor governance, so we’ll very quickly be able to tell those small schemes where governance is not good.”
The consultation will be open for 12 weeks, closing on 24 September. Responses can be submitted through the TPR website.
