The Pensions Regulator published new research on the skills and knowledge of pension scheme trustees and their boards in the context of major industry reforms.
While the regulator already provides education, guidance and tools to help trustees perform their roles, this research is part of ongoing work with the industry to consider what more can be done to improve outcomes for savers and clarify duties for those running or supporting schemes.
By publishing the research, the regulator intends to stimulate constructive debate about how it, Government and regulatory bodies, and the pensions industry at large, can raise standards sufficiently to increase confidence amongst consumers that their retirement savings are in high quality, well-run schemes.
A survey among 800 trustees of defined contribution (DC), defined benefit (DB) and hybrid schemes was commissioned to better understand their ability to fulfil governance and administration roles and scrutinise the quality and value for money of their advisers, administrators and investment managers.
Headline findings from the quantitative research show that larger schemes are more likely to be well governed than small and medium schemes. Larger scheme trustees are more likely to have received training, have greater access to advisers and spend more time on their duties. The findings also suggest that, in general, DB schemes are better governed than DC schemes, and schemes used for automatic enrolment are more engaged.
Other headline findings include:
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Schemes with only professional trustees were more likely to be well run, for example in their ability to assess the value for money of investment advisers. Small schemes were less able to afford advisers and were less able to challenge their advice. Overall the majority of trustees rarely disagreed with their advisers.
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Schemes used for automatic enrolment were more engaged with scheme governance and offered more formal training to trustees. The regulator supports this, in line with its recommendation to small employers preparing for automatic enrolment to choose a high quality large scheme such as a multi-employer master trust or a group personal pension (GPP).
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While trustees almost universally believed that they had sufficient training opportunities, only half of schemes reported that any of their non-professional trustees had undertaken formal training in the last year.
To explore key issues on the effective operation of trustee boards in more depth, the regulator is undertaking more qualitative research and analysis, focussing on areas such as the structures and processes that promote the effective operation of trustee boards, particularly on the role of the Chair, and the best way to deploy training and support tools to achieve effective trusteeship across schemes of all sizes and benefit structures.
Next year the regulator will set out what it believes an effective 21st Century trustee looks like and what it will do to further support trustees.
The regulator already provides free online learning for trustees in its Trustee toolkit and has published guidance and tools on issues such as covenant and investment strategy. A revised code of practice on DC governance and administration will be published for consultation later this year.
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