Independent Trustee Choice - Part 2

11th October, 2010

  • In this article in a short series about choosing an independent trustee I will look at the skills and experience required to act as a professional pension scheme trustee.

    First and foremost professional trusteeship is a generalist role.

    To hold his or herself out as a professional a trustee should be able to demonstrate skills and experience in the majority of the following areas:

    • Investment and Economics
    • Pensions Law
    • IT and Information Security
    • Pensions Administration Practice
    • Accounting and Corporate Finance
    • Governance and Chairing Skills
    • Actuarial Science

    For some appointments where the continued support of the sponsoring employer may not be strong enough to rely on in future a good understanding of insolvency law is required together with practical experience of the Pensions Protection Fund and its requirements and ideally substantial experience of similar situations.

    It is obvious but still worth stating that no single individual can be on top of everything in this list, however a working knowledge of everything is required.  A lifetime of working as a pensions manager for a large secure company or as a pension scheme actuary will not equip an individual for the role unless the experience has been wider.  I have heard professional trustees who have been happy to state that they do not understand corporate finance and always rely on advice from a specialist.  Shame on them!  As a trustee you do not need to be an expert in every discipline (that would be impossible) but you cannot do an adequate job without being able to challenge professional advice and direct the relevant advisers.

    A good option is to choose an independent trustee firm rather than an individual trustee where the combined skills of several individuals complement each other.

    An employer should ensure that they have a good understanding of the level of knowledge that a trustee has and a good idea of how that knowledge was acquired.  Is it theoretical knowledge obtained through study and qualifications or has practical experience been obtained?

    How broad and deep are the individual’s connections in the pensions industry –are they up to date and if so how do they stay up to date?

    What are the individual’s softer skills like?  How will they gel with other trustees and the employer’s personnel.

    Interviewing the prospective candidate is essential.  Ideally at some length.  This individual or firm could be the most important hire than an employer makes!

    Brian Spence is a founder of actuaries Spence & Partners Limited and a director of independent trustee Dalriada Trustees Limited.  You can follow him at @briandspence or @PensionsEndgame on Twitter or link to him on LinkedIn.  Dalriada provides professional trustee services and Spence & Partners can provide support to employers in appointing an independent trustee.  Brian has written a series of articles on appointing an independent trustee.

    Follow @SpencePartners and @DalriadaTrustee on Twitter.

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    • Published byBrian Spence

      Brian has been working in pensions since 1987 and qualified as an actuary in 1990. Brian founded Dalriada Trustees and our parent company 3173 Limited. Until February 2024 he was a Dalriada Director and Group CEO, Brian then stepped back from...

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