Analysis:Member-nominated trustees' level of familiarity with the Pensions Regulator's expectations varies significantly from scheme to scheme, so how can the commitment and understanding shown by some boards be extended across the pensions universe?
The pensions watchdog has been striving to raise trustee standards, most recently through its new 21st century trusteeship campaign.
The regulator’s got to really force those trustees who aren’t engaged to engage, and the only way they can do that is by picking the worst and making an example of them
Richard Butcher, PTL
But despite efforts to educate trustees and improve scheme management, the regulator may still have a long way to go. For example, its research has highlighted that many defined contribution schemes are failing key governance requirements.
Targeting more trustees
Groups such as the Association of Member Nominated Trustees represent a largely engaged population of trustees, and continually encourage trustee members to undertake appropriate training.
However, while AMNT membership has risen from approximately 450 to 750 in the past two years – representing nearly 550 pension funds – there are around 6,000 schemes in the UK.
Those who come forward to join the AMNT are likely to be the most committed in terms of training, said AMNT co-chair David Weeks, stressing the need to find those less engaged trustees and work with the Pensions Regulator to improve standards.
He added: “The question is: What sort of outreach work should take place in order to get more people in the net?”
The watchdog said that in its outreach communications, including the 21st century trusteeship campaign and monthly trustee roundup email, the regulator emails around 38,000 trustees.
"In our campaigns we are testing a range of approaches and methods to engage trustees, including a more directive approach in our messaging which, early results show, increases email open rates," said a spokesperson, adding that the regulator also uses advisers as a conduit for information, and works with organisations like the AMNT.
The spokesperson said there was "clearly a balance to be struck" between education and enforcement.
"Our objective is to embed the benefits of good governance on more boards. But we have made clear that we will also take enforcement action where schemes are not complying with the basics."
Make an example of those who do not engage
Richard Butcher, managing director of professional trustee company PTL, agreed that the AMNT has been successful in engaging some of these MNTs, but said that “it’s a small minority” and that the current reach of regulators and organisations is problematic.
“Ultimately… it takes intervention on the part of the regulator,” Butcher said.
Publishing yet more material on their website would not be useful, he added, pointing out that the trustees who are not engaged are not going to be reading it anyway.
“The regulator’s got to really force those trustees who aren’t’ engaged to engage, and the only way they can do that is by picking the worst... and making an example of them,” Butcher said. “There’s no point educating if these people aren’t going to engage, so they’ve got to enforce.”
Generic emails do not work
Chris Roberts, trustee representative at Dalriada Trustees, said multimedia could help the regulator reach more trustees.
MNTs do not always engage with the regulator’s mailing list emails. "They need to find other ways of getting at individuals,” he said.
Roberts explained: “There will be individuals who will ignore emails from the Pensions Regulator, because they just assume that they’re circulars, and they aren’t aimed at them.”
Getting employers to contact trustees regarding the importance of training may be more effective, he suggested.
“At employer level, it’s far more likely to be taken in because it feels relevant to the individual,” Roberts explained.
TPR campaign outlines governance basics
The Pensions Regulator has launched a new campaign directed at trustees and their advisers, as part of a wider push to raise governance standards, but experts say its success relies on collaboration and engagement from all stakeholders.
Tim Middleton, technical consultant at the Pensions Management Institute, suggested that “the regulator could consider using a bit more of the stick as well as the carrot”. However, this might lead to weaker trustees resigning, he noted.
He also noted the trend of a greater use of professional trustees in schemes, which could help boost trustee training and engagement.
Ultimately, “something that’s a bit more imaginative and creative would be beneficial”, he said.
