Fresh thinking Professional trusteeship in the 21 st century How the landscape for professional pension scheme trustees is evolving 24 January 2018
Agenda Introduction: François Barker Current legal landscape: Sarah Swift Standards for professional trustees: Andrew Bradshaw A word from the Regulator: Amanda Latham What s on the horizon: Jeremy Goodwin Drinks reception 2
Introduction François Barker
Introduction Why are you here? How is the pensions world changing? Rising expectations for professional trustees How can we help? website eversheds-sutherland.com/pthub four-monthly update seminars (next date 24 May 2018) 4
The current landscape for professional trustees Sarah Swift
Trust law What are the basic requirements for professional trustees? Trust law low basic threshold higher duties where you hold yourself out as knowing more Trustee Act 2000 basic provisions exceptions for pension schemes Pensions Act 2004 Where does that leave you in practice? 6
Some survey results Are there any areas where it is particularly difficult to comply with the enhanced duty of care? Do you agree with the Regulator s view that greater standards of duty and care should be expected from professional trustees? 36% said yes 88% said yes 7
What the Pensions Regulator thinks The Pension Regulator expects more: We expect higher standards from professional trustees We want to see good quality professional trustees with expertise across trustee matters generally who will help improve the governance of pension schemes. Schemes should consider the appointment of a professional trustee What should be expected from them? Knowledge generally Experience Qualifications 21 st century trusteeship 8
Some more survey results Some thoughts about professional qualifications and general levels of knowledge and understanding Should professional trustees be required to have a qualification Should there be a professional body responsible for setting standards and overseeing the performance of professional trustees? Do you think that the trustee boards on which you sit (when viewed as a whole) undertake sufficient training to fulfil their role effectively? 61% No 71% Yes 83% Yes 9
Liability What does the enhanced duty of care mean in terms of liability? Irreducible core of duties Exoneration clauses Basic legal position Scheme rules Law Commission Pensions Act limitations Monetary penalties policy 10
Requirements where you are the chair Do you need one? Trust Deed DC scheme - yes DB scheme not yet but probably coming Appropriate characteristics: Effective leader Not an expert in everything What should they do? Should Chair assume similar governance responsibilities to those expected of a chair of a corporate board? 20% said No 11
Proposed standards for professional pension scheme trustees Andrew Bradshaw
What is being suggested and why Proposed standards for professional trustees Published by the Professional Trustee Standards Working Group Endorsed by Pensions Regulator Intended to come into force in Spring 2018 Will operate on a comply or explain basis Accreditation framework also proposed A word from the Regulator 13
Some key recommendations 25 hours CPD every year Fit and proper person test (more in Jeremy s talk) Peer review of key decisions Impartiality Complies with all relevant laws and regulations Additional requirements for chairs Any comments on proposals? 14
What s on the horizon? Jeremy Goodwin
We asked you what you thought the biggest challenges over the next 12 months were likely to be Sponsoring employers Member engagement Too much new stuff GDPR Impact of master trust regulation Regulator s expectations Increasing expectation from clients Enhanced governance Funding and valuations Resolution of indexation issues 16
A fit and proper person regime? Is this coming and what would it mean? 21 st century trusteeship consultation IORP II HMRC requirements Master trust regulations 17
DB White Paper on security and sustainability What might be in it to concern trustees To be published in spring What might it say: Mandatory use of professional trustees Stressed sponsors and scheme funding Affordability Consolidation of schemes Pressures on Parliamentary time mean that changes may be limited 18
What else might the Regulator have in store? More, more, more! More resources to frontline regulation teams to allow early and quick intervention Record keeping and data maintenance Drive up standards across schemes with particular focus on chairs and professional trustees Effective regulation of master trusts 19
Anything else? Of course there is. Some highlights are Brexit Cyber security and GDPR Impact of IORP II GMPs and equalisation 20
Questions? 21
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