Trustees should pay attention to TPR’s corporate plan

Broadly, it aims to enhance and protect savers’ pensions through a number of different mechanisms, be that the new moral hazard enforcement powers brought in by the Pension Schemes Act 2021, further work to protect savers against scams, or measures to support good decision-making.

Over the past couple of years, TPR has demonstrated flexibility in helping trustees and sponsoring employers cope with the impact of the global pandemic, but this plan makes it clear that its key priorities are not going to be influenced by challenging economic conditions.

Its aims and objectives continue to apply to all pension schemes, regardless of size.

From guaranteed minimum pensions equalisation and pensions dashboards, to the Task Force on Climate-related Financial Disclosures and the new funding code, there is a lot for trustees to get their heads around

What does that mean for trustees?

For a well-run scheme, which looks ahead, manages risk and plans for the future, it should mean little change for strategy and long-term objectives.

That said, while TPR is clear that it remains committed to supporting trustees, it is the sheer volume of increased governance requirements that could prove a challenge for some trustee boards.

The danger is that trustees become bogged down with ensuring compliance and take their eye off the bigger picture of what they are trying to achieve for members, or they have inadequate resource available to tackle everything they need.

For smaller schemes, governance budget and resource are often proportionate to the scheme membership size and that can limit trustee progress. 

When we look at what is in flight and what is coming down the track, it is easy to see why trustees might have concerns about what they are expected to get to grips with, particularly for those whose “day job” is not pensions.

From guaranteed minimum pensions equalisation and pensions dashboards, to the Task Force on Climate-related Financial Disclosures and the new funding code, there is a lot for trustees to get their heads around.

This is against a backdrop of increased pressure on scheme administrators as they support trustee boards in dealing with other changes, at the same time coping with these additional project demands.

Good examples are the new transfer value regulations and the “stronger nudge” requirements in relation to defined contribution benefits, which are having to be embedded into administrative processes.

Trustees need to ensure that this “business as usual” work does not get neglected because of administrator resource being spread too thin through project demands.

There is also the danger that some developments become tick-box exercises, rather than achieving their key aims.

For example, preparing for TPR’s consolidated code of practice is an ideal opportunity for trustees to look at the scheme’s governance as a whole and how effectively it works in practice, taking steps for improvements where necessary.

However, for some trustee boards, ensuring compliance with the code may end up being the focus. 

Successfully managing what lies ahead

Although the volume of developments to address and tackle is significant, TPR is clearly committed to supporting trustees in the effective running of schemes in savers’ interests, and that can only be a good thing.

Trustees should not be daunted by what lies ahead and can tackle their workloads successfully by thinking about what is in flight and how it is going to be factored into scheme business.

Trustees should:

• look at their business plan and identify the pinch points in terms of administration support;

• schedule time to speak to their administration lead to see what resource is available, and when — does the scheme need to secure support for a project now, even if the project is not kicking off for another year? If so, it is time to book the support;

• challenge themselves on what is being planned in the business plan — are all regulatory and legislative requirements covered, and is the focus on the right areas that will bring most value? If not, replan and prioritise.

Ultimately, it is by taking a proportionate approach for the scheme in question, and by prioritising what is important, that trustees will be able to minimise risk and enhance the protection of members’ benefits.

Jennifer Adams is an associate director at Independent Trustee Services