UK pension schemes should consider appointing an independent professional trustee (IPT) to help navigate increasingly complex risks, according to a new governance guide published today.
The guide from Willis Towers Watson (WTW) suggests that the experience and specialist knowledge held by increasingly in-demand IPTs can provide fresh insight and leadership for pension schemes.
Previous research by the firm found that nearly nine-in-10 schemes with at least one IPT think that all schemes should employ one.
The guide also provides an analysis of the Pensions Regulator's (TPR) new combined code, which is expected to become law before the end of the year, and practical advice on the steps schemes should take to make sure they are ready and compliant.
“We believe that IPTs can have a big part to play in achieving successful scheme governance,” said Jenny Gibbons, WTW's governance lead.
“The complexity and time required to run a scheme has increased significantly in recent years, and professional trustees have the specialist knowledge and resources available to manage these challenges.
“In addition, tougher new TPR powers and a hardening insurance market have made it more difficult for others, such as member-nominated or employee appointed trustees, to manage or mitigate both the real and perceived risks attached to the role, so an IPT can help here too.”
This comes after separate research found that more than eight in 10 UK pension trustees believe they will need to make “significant changes” to comply with TPR's new code of practice once it is finalised.
The new code will merge TPR's 15 existing codes of practice into one online, up-to-date and consistent source of information on pension scheme governance and management.
Despite the challenges facing schemes, 100% of attendees to a recent WTW webinar held with TPR agreed that good governance leads to good outcomes.
“Good governance is about maintaining control, oversight, asking probing questions, and making sure that all is behaving as it should,” said TPR policy lead, Nick Gannon. “Without good governance, the wheels can come off a pension scheme very quickly.
“We welcome any initiative from the industry that helps trustees understand the expectations we have set, and the effort needed to achieve these goals, which will have a big impact on schemes’ success in the long run.”
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Author: Chris Seekings