New guidance for new trustees

Matthew Swynnerton talks through the requirements for new scheme trustees

In September The Pensions Regulator (TPR) produced new guidance specifically for first-time pension scheme trustees. This introductory guide to the role and responsibilities of a trustee is intended for new trustees of schemes with more than 12 members and is provided in addition to the general regulatory practice note that was issued in December 2007 and the trustee knowledge and understanding (TKU) code of practice from November 2009.

This publication coincides with the start of the academic year. Just like any new student, these trustees may initially feel daunted by their new responsibilities and duties, including these TKU obligations.

What do I need to know?
Trustees have significant responsibilities in relation to their pension scheme and its members. All trustees are therefore required by law to have relevant knowledge and understanding of their role. These requirements broadly form two categories:

i) TKU specifically linked to the scheme’s governing documents, i.e. its trust deed and rules, statement of investment principles and (in the case of defined benefit schemes) the statement of funding principles; and

ii) TKU in relation to the law relating to pensions and trusts, together with the principles of funding occupational pension schemes and the investment of their assets.

Where do I start?
There is no substitute for any trustee trying to become familiar with their scheme’s governing documents other than to actually go through them. New trustees should ensure that they have access to the most up to date version of their scheme’s trust deed and rules (together with any subsequent deeds which have amended its provisions) and the most recent statements of investment and funding principles, in addition to any minutes from meetings, scheme booklets, annual reports or other scheme documents (such as a business plan) which are considered to be relevant.

In terms of general TKU training, the first place for a new trustee to look is the Trustee Toolkit available on TPR’s website. This free online resource is generally regarded by TPR to be essential study material for new trustees.

Trustees may also find it helpful to review TPR’s general regulatory practice note and TKU code of practice referred to in the introduction in order to better understand the scope of their TKU obligations.

What should my TKU training cover?
Whilst the Trustee Toolkit contains several ‘essential’ modules for completion, the additional training trustees will need to undertake will depend on the type of scheme they will be governing and any particular features it has.

TPR therefore recommends that a ‘training needs’ analysis should be performed at the outset to ensure each new trustee covers all material relevant to his or her scheme.

How long do I have to complete this training?
New trustees must complete their initial TKU training within six months of their appointment.

TPR acknowledges that it may be a challenge for trustees to find the time to gain the required knowledge in light of their other duties, but stresses that it is essential that this training is undertaken.

How do I begin?
First-time trustees may feel overwhelmed by their TKU obligations. New trustees may therefore find it helpful to break the process down into a number of smaller stages; such as looking at the general training on a module-by-module basis, rather than thinking about the ‘Trustee Toolkit’ as a whole.

It is also helpful to take advantage of resources closer to home. New trustees are likely to find it helpful to discuss with their chairman and fellow trustees the training available and may also wish to look into the training offered by the trustees’ consultants and advisers. It would also be helpful to contact the consultants and advisers to ask to be put on distribution lists for pensions-related updates.

New trustees should also remember that TKU is an on-going obligation. Pensions law is constantly evolving and it is imperative that trustees continue their development as they settle into their role. As TPR notes, training is an important feature of a well-run scheme and by acquiring the requisite knowledge and understanding at the outset, new trustees will have the foundations for the successful governance of their scheme.

Written by Matthew Swynnerton, partner in the employment group, DLA Piper

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