New measures from the TPR will “protect savers and improve member outcomes” says the regulator.
The plan of action comes as the TPR publishes its response to its consultation on its recent proposal document: ‘Future of Trusteeship and Governance.’
A major change will be a requirement for trustees to constantly review and develop their knowledge and skills. There will also be requirements to improve diversity and inclusion on trustee boards.
The TPR will update its Trustee Knowledge and Understanding code of practice and review the ‘trustee toolkit’ to make its expectations clearer and to drive up standards of trusteeship.
Once the new standards are in place, the TPR says it will run a regulatory initiative to test levels of trustee knowledge and understanding and to consider appropriate action where they fall below expectations.
However, the TPR has deferred decision on whether it should be mandatory for pension scheme boards to engage a professional trustee and if governance standards for sole trustees should be strengthened.
In these areas, the TPR says it will not immediately push for new measures but will instead support the Association of Professional Pension Trustees’s standards and planned industry accreditation framework for professional trustees.
The TPR is also “supportive” of APPT’s intention to develop an industry code for sole trusteeship.
On diversity, the TPR says only that it will "establish and lead an industry working group" to find ways of supporting schemes to take steps to improve trustee diversity. There will be no major changes to diversity requirements in the interim.
Some 114 written responses were submitted during the consultation and the TPR says most showed broad support for the TPR’s strategy that all savers should benefit from “efficient and well run pensions”, with the “right people" in place to make good investment decisions and deliver value for money.
David Fairs, executive director of policy at TPR, 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. Vital to this will be boosting knowledge and understanding and ensuring trustee boards have a diverse make up to make the best decisions for members.”