The Pensions Regulator has launched a campaign to protect workplace pension savers by driving up the standards of governance across pension schemes.
21st century trusteeship – Raising the Standards of Governance is part of TPR’s commitment to support schemes by being clearer and more directive. It outlines how people involved in running schemes can meet expected standards and what action TPR will take if they don’t improve. It’s also part of our commitment to be clearer, quicker and tougher.
As part of this campaign we have sent out the first set of targeted emails to trustees, scheme managers, advisers and employers. These direct people to dedicated pages on our website where we breakdown the fundamentals of governance into key themes, clearly outlining how pension schemes should be run.
The theme topics include:
- the importance of good governance
- clear roles and responsibilities
- clear purpose and strategy
- competence and integrity
- upskilling and training
- managing advisers and providers
- managing conflicts of interest
- managing risk
- meetings and decision-making
- value for members.
Our campaign is in response to a discussion paper we published last year on 21st century trusteeship and governance, which started an open debate on how we could raise standards among trustees and improve the way that schemes are managed.
Research which we undertook highlighted that while some trustees are doing a good job, many boards – particularly in small and medium schemes – have failed to act on TPR’s codes and guidance to meet standards of good governance. This is disappointing. Good governance is the bedrock of a well-run pension scheme and there is a clear link between good governance and good fund performance.
In our role as the regulator of workplace pensions the problems we see include:
- trustees and scheme managers lacking in skills and knowledge
- risks being managed inadequately
- ineffective management of conflicts of interests and decision-making.
Good governance is about having a motivated, knowledgeable, engaged and skilled board of trustees with the right structures and processes in place so trustees can make effective, timely decisions and manage risk.
It’s important to emphasise that we’re not asking the people running pensions schemes to do more work or meet new, higher standards. There are no new laws, guidance or codes. But what we are doing is being clearer about what standards need to be met and clearly signposting to resources and tools which can help.
We have a popular and free trustee toolkit which clearly sets out the essentials of running a pension scheme and we will be linking our 21st Century Trusteeship campaign to this where we can. We will highlight existing guidance and the sections of our codes which we expect people to meet.
We’re also creating new resources to try and make managing governance easier. They include a downloadable guide for trustees to take to their quarterly meetings which will help to steer effective discussions.
If schemes don’t meet the standards we expect we will continue to take enforcement action. If you don’t submit a scheme return or a chair’s statement then we will look to issue a fine. If you submit a return and it’s not complete or up to scratch we may also take enforcement action.
Fear of enforcement shouldn’t be the one and only motivation for trustees to get this right. They’re responsible for protecting the benefits to workplace savers so it’s important that they spend time and resources on governance. In the long run it will save time, save money and make a scheme more efficient. It all helps to minimise risk and maximise opportunities for a scheme and its members.
Anyone involved in running pension schemes will already have received the first email – please don’t ignore it. Open it, read it and follow the links. This is all designed to help you. Keep coming back to our website which is updated regularly.
Get the basics right first: make sure we have up-to-date information about your scheme, pay the scheme levy and complete your scheme return on time. Running a pension scheme can be complex and challenging, but good governance can help you to overcome these challenges and deliver good member outcomes.