Professional trustees should be held to “much higher standards” and legislative changes are needed to ensure they are fulfilling their responsibilities, Smart Pension has said.

In its response to the The Pensions Regulator’s (TPR) Future of Trusteeship and Governance consultation, Smart Pension noted the importance of the professional trustee on trustee boards due to the knowledge and experience they should bring.

The response highlighted the responsibility of being a trustee, who often face delicate and difficult trade-offs, and that a minimum level of knowledge and competence is crucial in making sure decision-making is effective.

It added that TPR needs to ensure that is it making expectations clear to all trustees and undertaking interventions where those expectations are not met.

“The expectations are a good starting point, but more action needs to be taken to raise awareness of these expectations and enforce higher standards,” Smart Pension said.

Although the firm agreed that legislative changes were needed to introduce a minimum level of trustee knowledge and understanding and ongoing learning, it must not “turn into a box ticking exercise”.

It believed that any requirement should focus on the outcome rather than “adopting a blunt input measure”.

Commenting on the consultation, Smart Pension director of policy and communications, Darren Philp, said: “For too long there have been too many poorly performing occupational pension schemes without the resources, expertise or willingness to improve standards for the benefit of pension savers.

"If the regulator really wants to raise standards in occupational schemes, it should go further and develop an entirely new approach, borrowing relevant bits from master trust authorisation in order to drive much-needed change and ultimately, consolidation.

“All schemes - whether big or small - should have good systems and processes, be run by fit and proper people and be sustainable and provide value for money. Everyone deserves that, regardless of the size of the scheme their savings happen to be in.”

Smart Pension concluded that all schemes should be required to report back to TPR annually and that the regulator should undertake regular surveys and/or thematic reviews.

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