Professionalisation of Trusteeship
6th July, 2020
Trusteeship is an old undertaking. It’s almost 100 years since one of the first key pieces of legislation was passed, the Trustees Act 1925, when Parliament updated Regulations around trustees’ powers and responsibilities.
And it’s probably fair to say that, at times, the world of trusteeship spins very slowly. How else to account for the fact that I am writing about the professionalisation of trusteeship almost a century after that important legislation.
In February 2020, The Pensions Regulator (TPR) published its response to the consultation on the future of trusteeship and governance. I want to look at three of the key areas on which they focused.
- Trustee Knowledge and Understanding (TKU) – TPR intends to review the Trustee toolkit to make expectations clearer and drive up standards of trusteeship.
- Scheme Governance structures – TPR is seeking to assist schemes to improve diversity.
- Professional trustees – TPR considered whether to make it compulsory for schemes to engage a professional trustee and whether governance standards for sole trusteeship should be strengthened.
At this point, TPR has decided not to push for widespread reforms immediately. Beginning with item 3, the consultation stayed away from requirement to have a professional trustee on every board, possibly because of the capacity issue, and instead focused on item 1, the Trustee toolkit. The toolkit will be reviewed and will support the industry accreditation frameworks for professional trustees that have been put in place.
A hard task
TPR appears to be treading the slow and steady path. If the goal is to protect savers and improve member outcomes then this is the time to take the hard decisions. Especially when we remember that often trustees are key to ensuring schemes are well run and provide good value for money.
If it is to remain relevant, the industry has a task on its hands. It must raise the bar for accreditation over time to ensure trusteeship standards continue to rise. This means the accreditation process should be reviewed in say 12 months. Data collected should include how many trustees have taken the time to go through the accreditation process.
The need to be technically competent goes without saying. In addition to this are the soft skills to perform the role of a trustee. Ensuring trustees remain able and competent will involve ongoing training together with practice. On an annual basis trustees report their CPD; on a three-year basis, they repeat the Trustee toolkit which itself is regularly updated. And finally, the trustee is recorded on a periodic basis participating in a meeting to provide feedback on their soft skills as well as behaviours necessary to measure their competence.
I would suggest that in the not too distant future, the trustee meeting will be online and available to be viewed by members. That means not only will trustees be carrying out their role, they will be seen to be doing so by scheme members in the same way as the public can now watch their MPs live on television from the House of Commons.
Dealing with diversity
Another step forward will be to change the way the pensions industry is perceived. It is presently seen as the place for a select few. There is a whole generation out there whose hearts and minds we must win.
We will do that if we can show that we speak their language and are prepared to listen to what matters to them. Diversity and inclusion is, therefore, not a nice to have but a necessary tool for our survival as an industry. Otherwise the pensions industry risks becoming irrelevant over time for vast swathes of the public that it seeks to serve.
We can start by asking all our members what they think, using the mediums they use to communicate, then seeking ways to bring in the voices of those who should be on our boards. Having expanded our catchment, we must listen to their views and opinions; there is no point inviting someone to the dinner table if all they do is watch others dine.
There is some good work being done. It must be taken to the next level and be more widespread if the industry intends to be around in another 100 years.