New requirements put pension trustees under more pressure (29/01/2010)

Pension trustees are under more pressure than ever before following the introduction of the Pensions Regulator’s revised set of learning requirements, according to actuarial consultants Lane Clark & Peacock (LCP).

Chris Green, Partner and Head of Trustee Training at LCP, said the revised requirements, which came into force in December, are much more demanding than the previous ones. Green commented “The impression from the Regulator is that the new training requirements are a straightforward evolution from the originals, but our view is that the Regulator has significantly raised the bar. Trustees are going to need professional advice to ensure they understand the new rules and meet the standards now required of them.”

The revised Trustee Knowledge and Understanding (TKU) code of practice requires trustees to “read thoroughly” their scheme’s trust documentation, which is often a lengthy and complex legal document. Before the changes, they merely had to demonstrate a “working knowledge” of it and it was specified that it was not necessary for every trustee to read it thoroughly.

A second key change is that the Regulator expects trustees to use its own online learning programme, known as the Trustee Toolkit, unless they can find a suitable alternative. If using an alternative learning programme, trustees should ensure that it meets both the requirements of the TKU regime and the individual trustee.

Chris Green said: “With the Pensions Regulator’s new requirements now in place, every trustee should take stock of their responsibilities and assess where they have gaps in their knowledge by the time of the next trustee meeting. We welcome the Regulator’s revised code for trustees, which should help ensure pension schemes are run effectively. However, it poses a far greater challenge to trustees.”

Green added: “The Pensions Regulator’s Trustee Toolkit is an excellent resource which provides a good basic understanding of trustees’ requirements. However, trustees would benefit greatly from additional face-to-face training, which is more interactive than the toolkit and provides an opportunity to ask questions which relate to their particular pension scheme.”