Pension schemes should consider appointing an independent professional trustee to help navigate the increasing complexity and risk involved in running a pension scheme, according to Willis Towers Watson (WTW).
This advice was included in WTW’s Good Governance Guide, which suggested that the experience and specialist knowledge held by these trustees might provide fresh insight and leadership for schemes, with research by WTW showing that nearly nine in 10 schemes that have at least one independent professional trustee thought all schemes should employ one.
WTW retirement business governance lead, Jenny Gibbons, said: “We believe that independent professional trustees can have a big part to play in achieving successful scheme governance. The complexity and time required to run a scheme has increased significantly in recent years and professional trustees have the specialist knowledge and resources available to manage these challenges.
“In addition, tougher new The Pensions Regulator (TPR) powers and a hardening insurance market have made it more difficult for others, such as member-nominated or employee appointed trustees, to manage or mitigate both the real and perceived risks attached to the role, so an independent professional trustee can help here too.”
Overall, the guide provided an analysis of TPR’s newly proposed combined code, as well as practical guidance on the steps pension schemes should take to make sure they are ready and compliant, and thoughts on the wider features of good governance for schemes.
The guide examined the code and governance across five sections, which include an examination of how good governance can help a scheme’s strategy and why diversity and inclusion can be essential to success.
Gibbons said: “Governance is the glue that holds pension schemes together and is tied intrinsically to effective decision making. It is the collection of structures practices and behaviours that facilitate good decisions.
“It is, therefore, not surprising that TPR has focused in recent years on improving the governance of schemes. With 100 per cent of attendees to our recent webinar held with TPR agreeing that good governance leads to good outcomes, there is little doubt in the industry that getting this right is one of the fundamental building blocks needed to run a successful pensions scheme.”
TPR policy lead, Nick Gannon, said: “Without good governance, the wheels can come off a pension scheme very quickly. We welcome any initiative from the industry that helps trustees understand the expectations we have set, and the effort needed to achieve these goals, which will have a big impact on schemes’ success in the long run.
“TPR is pleased by the responses we have received to our consultation, which shows the industry is working to understand the new code before it comes into force. We will be responding to the consultation feedback in due course. In the meantime, governing bodies can still take steps to understand how any new requirements may apply to their scheme.”
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