David Hodgson highlights the importance of effective trustee training

Trustee Knowledge and Understanding (TKU) has been high on The Pensions Regulator's (TPR) watch list for the last few years now and, in order to help trustees with this, TPR has developed the "Trustee Toolkit", which is contained on its website.

TPR published "Code of Practice No. 7: Trustee Knowledge and Understanding" on 30 November 2009. Existing trustees will be familiar with it and it is probably the first place that any newly appointed trustee should look, to get a feel for the level of knowledge required in order to become an effective trustee.

Two very relevant points from the code, for new trustees to be aware
of, are:

"The regulator is of the view that [the trustee toolkit] is required study for new trustees unless they can find an alternative learning programme which covers all the items in the scope guidance at a relevant level within the time allowed." (Point 46, Code of Practice No. 7)

"Newly-appointed individual trustees have a period of six months from the date of appointment as a trustee to complete the required learning." (Point 39, Code of Practice No. 7)

Whilst the trustee toolkit will provide some essential guidance for trustees, TPR also expects trustees to be familiar with their own trust deed and rules so, at the very least, new trustees should be reading through the documents they hold on file.

TPR has admitted to concerns that certain parts of the pension industry, particularly advisers, are "not as familiar" with its trustee toolkit requirements as they claim to be. Following a release of statistics in relation to a request for information under the Freedom of Information Act, TPR accepted that the current take up is far below its expectations.

It should be remembered that completing the trustee toolkit is not the only way of developing the knowledge needed to be a competent and effective trustee. However, in the absence of any other structured training, it is highly recommended that trustees start to work their way through it. There are other methods of raising knowledge levels, but the trustee toolkit offers a couple of significant advantages over these: first, it can be completed at the trustee's own pace, dipping in and out of the different modules as time permits, and second, it is free!

Having completed the trustee toolkit, it may be some considerable time (if ever) before the trustee gets to put some of this theory into practice. Therefore, a trustee needs to be aware of developing trends and attending presentations and training sessions offered by lawyers and other advisers is useful to build on the initial knowledge and to compare the position of their own scheme against others.

As regular readers of Pensions Age will be aware, the trade press is also a very useful source of information and there are many articles published offering guidance to trustees about what is best practice in running a pension scheme.

For those who want to demonstrate a further degree of training, the Pensions Management Institute (PMI) also offers two awards in pension trusteeship, one for defined contribution schemes only and one which also incorporates issues for defined benefit schemes. These are broadly based on the modules of the trustee toolkit.

Whichever method is chosen, it is important that all training, both formal and informal, is recorded. It is good practice to have a standing item on every trustee meeting agenda to cover TKU. If it is not possible to receive a formal presentation at each meeting, always record the progress that individual trustees are making. This can include things such as progress through the trustee toolkit, seminars attended, articles read etc. Remember, The Pensions Regulator's view is always that if something is not documented, it didn't happen. By including TKU as a standing agenda item, it gives the trustees the discipline of ensuring that there is a continuous aim to raise their knowledge through a variety of methods.

Irrespective of the TPR's involvement, it is imperative that trustees understand their rights, duties and responsibilities in order to administer their scheme properly, and they will only do that by taking the time to achieve, maintain and improve their TKU.

Written by David Hodgson, associate director at RSM Tenon

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