TPR publishes updated trusteeship measures

The Pensions Regulator (TPR) has dropped plans for mandatory professional trustees in its consultation response on new measures to protect member outcomes.

Responding to the Future of Trusteeship and Governance consultation, the regulator said it plans to omit some of the more stringent requirements around professional and sole trusteeship.

TPR confirmed plans to review and update its Trustee Knowledge and Understanding Code of Practice, alongside its trustee toolkit, in an effort to to make “expectations clearer and to drive up standards”.

The regulator will run a regulatory initiative to test levels of trustee knowledge and understanding following the introduction of the new standards, and will “consider appropriate action” where knowledge and standards fall “below expectations”.

The response has also outlined plans to establish and lead an industry working group, focused on improving trustee diversity, which is expected to boost knowledge and understanding across trustee boards.

However, the response has omitted more stringent proposals, including the mandatory requirement for a professional trustee and increased standards for sole trustees.

The regulator stated that it would not “immediately push for new measures”, but rather will support existing APPT standards and the expected industry accreditation framework for professional trustees.

TPR also stated that it was supportive of APPT’s intention to develop an industry code for sole trusteeship.

Commenting on the new measures, TPR executive director of policy, David Fairs, said: “It is clear there is strong support from the industry for a collaborative approach to improving governance standards to protect savers and member outcomes.

“The route to achieving this goal is driving up standards across all schemes, but particularly in small and micro schemes that our research shows tend to have poor governance; we will encourage consolidation where trustees are unwilling or unable to improve governance to the required standards."

The failure to include requirements for a mandatory professional trustee was attributed to concerns raised within industry responses to the initial consultation, but the amends have raised concerns.

Dalriada Trustees head of technical, research and policy, John Wilson, stated:“This is a somewhat pragmatic response from TPR, not enforcing the appointment of a professional trustee but raising the bar in terms of the knowledge required across the board.

"However, given the increasing complexity of the environment in which schemes operate, and the difficulty which many lay trustees have in finding both the time and employer support required for their role, the net result may well be similar."

Following TPRs DC trust report, which found increasing consolidation in the DC market, it has confirmed plans to work alongside industry bodies and the Department for Work and Pensions (DWP) to overcome “barriers to consolidation”, while monitoring ongoing activity in this space.

However, the regulator made clear that it will not take a “blanket approach” to consolidation.

It stated: “If a scheme is well run and can demonstrate that it is offering value for members, TPR would not expect the trustees to consolidate”.

Broadly, industry reaction to the measures has been positive, with a record 114 written responses submitted during the consultation highlighting “broad support” according to TPR.

Welcoming the amended measures, Lane Clark and Peacock partner, David Everett, added: "[The regulator’s] decision to tread slowly and carefully is the right one.

"In a number of areas the regulator is either relying on or intending to work with industry bodies to influence its desired direction of travel.

"Far better to do this than seek legislative solutions at this stage – such as making it mandatory for trustee boards to appoint a professional trustee."

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