Gaps in Pensions Trustee Framework must be addressed to ensure best outcomes for savers
RSM UK says that while the Government’s proposed Pensions Trustee Framework is a welcome step, several elements need further consideration to ensure it achieves the best outcomes for trustees and savers. The framework announced yesterday aims to set out the skills trustees need to prepare for consolidation of pensions into megafunds, to strengthen trustees’ independence and ensure pensions savers achieve the best outcomes.
Elisabeth Storey, head of pensions at RSM UK, comments: “This proposed framework is a positive step, particularly the pragmatic focus on collective board capabilities, rather than individual accreditation. This is a sensible approach to ensuring members’ best interests are served. Bringing in trustee registration with The Pensions Regulator is also a welcome step, and brings benefits for both trustees and members.
“There are however several areas that need further development, and we want to see detailed guidance to address these. We’d particularly like to see a clear ethical framework which addresses any conflicts of interest for trustees. This will ensure trustees consistently make decisions in the best interests of their members, ensuring pensions savings deliver the best returns.
“We welcome the competency framework, but as always, the devil will be in the detail. We want to see a clearly defined baseline of knowledge and skills expected of every trustee board, which considers size and type of scheme, as well as risks and complexities. Larger and more complex schemes should be required to undertake an independent board effectiveness and competency review, rather than relying on the board to assess its own competence.
“Where skills gaps are identified, boards should be required to document an improvement plan with clear timeframes, with The Pensions Regulator intervening on any areas of persistent weakness. We need to ensure this framework raises standards for all and doesn’t just become a tick-box compliance exercise. Ultimately this needs to ensure every trustee board is capable of making good decisions in the best interests of its members.”