TPR proposes trustee model changes in consultation

Proposals on how to reduce the number of badly run schemes and improve the trustee model have been outlined by The Pensions Regulator (TPR) in a consultation today (2 July).

The Future of Trusteeship and Governance poses questions to the industry about how to increase trustee knowledge and understanding, how to improve diversity on boards, what the role of accreditation should play and whether sole trustees can govern effectively.

TPR warned that any schemes that it deemed to be poorly run will face calls to either improve or consolidate.

The consultation queries industry members on whether a professional trustee should be required on every board, how barriers to consolidation can be removed, and whether there should be a legal requirement established to ensure that trustees meet minimum standard of knowledge and understanding.

TPR executive director of regulatory policy, analysis and advice, David Fairs, said that all savers “should be in well-run schemes” and that this paper presents how TPR is considering how to change its regulations “to achieve that”.

He continued: “The trustee model isn’t broken, but it does need to be greatly improved. There is stark evidence that the current system doesn’t work for all and there is a clear disparity between the experience of savers in well-run and badly run schemes.

“If trustees cannot meet the standards we expect, we believe they should wind up and consolidate savers into a better run scheme.”

The Pensions Management Institute president, Lesley Carline, added: “Given the number of pension scheme members suffering from poor scheme governance, this consultation is very welcome.

"It has pulled no punches in asking the hard-hitting and provocative questions that schemes and their trustees need to answer, positing pragmatic solutions to take the industry forward."

Responses, which can be submitted through TPR’s website, can be issued for 12 weeks, with the consultation closing on 24 September.

Fairs concluded: “Despite our work, including through initiatives like 21st Century Trusteeship, there is still a subset of disengaged trustees who either refuse or are unable to improve standards in their schemes.

“This clearly is not fair for savers – we believe that everyone saving for a pension should be in a scheme with excellent standards of governance and which is providing good outcomes for savers.”

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