Pension trustee system needs to be overhauled
The Pensions Regulator (TPR) is consulting on the future of trusteeship in a bid to raise standards and reduce the number of poorly governed pension schemes
3 Jul 2019
Badly run schemes need to improve or consolidate, the regulator says, to address the serious governance issues.
David Fairs, executive director of regulatory policy, analysis and advice at TPR, said: ‘We believe all savers should be in well-run schemes that deliver good value. This paper outlines how we are considering changing the way we regulate to achieve that.
‘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.
‘If trustees cannot meet the standards we expect, we believe they should wind up and consolidate savers into a better run scheme.’
The 30-page consultation paper outlines the problem of badly run pension schemes and considers how the trustee model can be made more effective.
In particular, it poses questions to the industry about how to improve and evidence trustee knowledge and understanding, how to encourage diversity on boards, the role of accreditation and whether sole trustees are able to govern effectively.
Among the issues under consideration are whether there should be an accredited professional trustee on every board, and whether a legal requirement should be brought in for trustees to meet minimum standards of knowledge and understanding and ongoing learning. The consultation will also look at the ways in which barriers to consolidation could be removed.
Fairs said: ‘Despite our work, including through initiatives like 21st Century Trusteeship, there is still a subset of disengaged trustees who either refuse or are unable to improve standards in their schemes.
‘This clearly is not fair for savers - we believe that everyone saving for a pension should be in a scheme with excellent standards of governance and which is providing good outcomes for savers.’
The consultation closes on 24 September.