In its response to its Future of Trusteeship and Governance consultation, The Pensions Regulator (TPR) has announced that it will be taking new measures to protect pension savers and improve member outcomes.
The consultation, which took place between July and September 2019, received 114 responses from a mix of layperson and professional trustees, chairs of trustee boards, pension managers, advisers, consultants, industry stakeholder organisations and trade bodies. It called for evidence and views relating to various proposals for protecting the interests of savers.
As part of its response, TPR has committed to reviewing and updating its Trustee Knowledge and Understanding code of practice and trustee toolkit, making expectations clearer with a view to driving up standards of trusteeship. It also plans to run a regulatory initiative to test levels of trustee knowledge and understanding, and consider appropriate measures where these fall short of expectations.
TPR also plans to establish an industry working group to find ways of supporting schemes in taking steps to improve trustee diversity. This group will consider the following points: what is meant by diversity and inclusion; best practice guidance on board composition and how boards can make the most of the pool of potential trustees they have available to them; practical tools and case studies to promote the recruitment of diverse trustees; inclusive material that can help to promote the benefits of becoming a trustee; and engagement with employers to recognise the benefits of the trustee role in personal development of employees.
The regulator has also stated that it will continue to monitor defined contribution (DC) consolidation activity and work with the industry and the Department of Work and Pensions (DWP) to overcome barriers to consolidation.
David Fairs, executive director of policy at TPR, said: “It is clear there is strong support from the industry for a collaborative approach to improving governance standards to protect savers and member outcomes.
“The route to achieving this goal is driving up standards across all schemes, but particularly in small and micro schemes that our research shows tend to have poor governance; we will encourage consolidation where trustees are unwilling or unable to improve governance to the required standards. Vital to this will be boosting knowledge and understanding and ensuring trustee boards have a diverse make up to make the best decisions for members.
“We have listened carefully to what the industry has told us, and we are not at this stage going to introduce new measures in areas such as sole trusteeship and adding a professional trustee to boards.
“However, we will continue to monitor standards closely to ensure our expectations for scheme governance are met, and that the right action is taken where schemes do not improve. Only in this way, and by working with industry bodies, can we ensure savers are adequately protected.”