Government turns its attention to pension trustee skills

The pensions industry is waiting for the outcome of the government’s call for evidence, issued by the Department for Work and Pensions (DWP) and the Treasury (HMT), to support the development of policy for improving pension scheme trustee skills and capability.

In launching the call, the DWP and HMT said they wanted to “deepen the evidence base around trustee capability and other barriers to trustees doing their job in a way which is effective and results in the best outcomes for savers”.

Areas of focus

The call, which closed on 5 September, focused on the areas of trustee skills and capability, the role of advice, and other barriers to trustee effectiveness. The government departments said they were particularly interested in whether trustees had the right knowledge and skills to consider investment “in the full breadth of investment opportunities”.

In a joint ministerial foreword, pensions minister Laura Trott and economic secretary to the treasury Andrew Griffith, said key planned policy changes including the transformative Value for Money framework, the extension of Collective Defined Contribution pension scheme provision, bringing forward a regulatory regime for consolidators of defined benefit schemes, setting out a decumulation framework that provides support for members, and a solution to address the long-standing and costly problem of deferred small pots.

They commented: “The trustees of pension schemes would need to operate in an evolving and more complex regulatory environment for these policies to work and deliver for savers. We recognise that the role of a trustee is not an easy one, and it comes with significant responsibility. We must ensure trustees are properly equipped and supported to meet the demands of the role.”

In total, the call for evidence asked 25 questions of the industry ranging from “Do trustees know what the knowledge and understanding standards expected of them are? to “Do lay trustees have enough time and support to perform their duties effectively?” and “If not, what changes would support this?”.

The findings will be published on the government’s website though the timescale was not given.

MHM’s view

We welcome the government’s call for evidence in order to better understand and assess the skills and capability required of trustees as it is an area of growing concern across the industry. We also agree wholeheartedly with the pensions minister and the economic secretary to the treasury that the regulatory environment in which they expect to implement their pension policies is “evolving and more complex”.

However, there is another context which only adds to the worry about pension scheme management, which we feature in our separate piece on achieving value for money for members of defined contribution (DC) schemes. As a recent survey by The Pensions Regulator revealed, awareness of some of its obligatory scheme management requirements is in short supply, let alone the possession of the skills and capability to manage them.

One course of action that concerned trustees and employers can take, if they think the time has come to switch from well-intentioned volunteers to full-time professional trustees, is to contact MHM. We are independent professional trustees with an in-depth knowledge of the pensions industry and the regulatory scheme management requirements that must be met.

For a free, no obligation conversation, call Paul Wilson on 07768 030365 or email info@sandccarsalesharrogate.co.uk.