Key Dates

Consultation response issued on 10 February 2020.

Summary

The Pensions Regulator has issued a response to its consultation on the Future of trusteeship and governance.  Points to note include the following.

• The Regulator expects that, over time, there will be fewer but better governed pension schemes in the UK.

Trustee knowledge and understanding (TKU)

• The Regulator's single code project seeks to consolidate its existing 15 codes of practice into a single web-based code and is expected to be published for consultation in the first half of 2020.  The single code will include new areas such as ESG and climate change.
• The Regulator will review and update its TKU based content and hops to consult in early 2021.    
• Following the revision of the TKU content and guidance (and after allowing a period for schemes to adjust), the Regulator will run a "regulatory initiative on TKU.  This will involve contacting a large number of schemes about a particular risk and engaging with those that have not adequately addressed the risks identified.
• The Regulator has decided against mandatory qualifications or CPD for trustees but will instead set out a range of acceptable methods for demonstrating TKU.  This may include setting an indicative baseline of 15 hours per year ongoing training for lay trustees.  Professional trustees will be expected to follow industry standards – currently set at 25 hours per year.
• The Trustee Toolkit will be reviewed over 2020/21.

Scheme governance structures for effective decision-making

• An industry working group will be asked to help schemes improve the diversity of scheme boards.  At present, the Regulator does not intend to require schemes to report on the steps they are taking to increase diversity on their boards, but this may be revisited in future.
• At present, the Regulator will not require all trustee boards to have an accredited professional trustee, although this may be reconsidered in future.
• The Regulator welcomes the current development of an industry code for sole trusteeship by the Association of Professional Pension Trustees (APPT).  The Regulator also intends to commission research on the scale and reach of sole trusteeship in occupational schemes.

Driving DC consolidation

The consultation response considers options for winding up DC schemes which include guarantees.  The Regulator will not issue guidance for such schemes in the immediate future as the DWP is considering responses to its consultation "Investment innovation and future consolidation" and subsequent statutory guidance is likely to include specific reference to schemes with guarantees. 

Date Accessed: 03/12/2021