Trustee education: can training be engaging and insightful?

The radical reforms to the pensions industry may mean it has never been more complicated to be a trustee. Educating trustees to make sure they are fully equipped to take the decisions necessary is an important task, but how can schemes make sure trustees are being educated in the most effective and engaging way possible?

Most trustees are very conscious of their knowledge and understanding, and they want to learn

Ian McQuade, Muse Advisory

Richard Butcher, managing director at independent trustee company PTL, said: “The expectation for trustees is very, very high and I don’t envy any lay trustee the task of trying to stay up to date. The pensions world is moving so fast the professionals can barely keep up.”

Butcher added the industry was generally poor at engaging and educating people, but that novel approaches can be effective. He suggests hiring people with a professional background in education to give trustees the basics, before having a pensions professional fill in the more technical aspects.

“It’s not easy, [it’s] time-consuming and costs a lot of money,” he said.

The Pensions Management Institute offers a certification in pension trusteeship but Tim Middleton, technical consultant at the institute, said only a small percentage of trustees took the exam.

There is not a requirement for trustees to have a formal qualification in trusteeship, Middleton added, but the European Commission’s forthcoming Institutions for Occupational Retirement Provision directive includes proposals that would require trustees to pass a qualification.

“Trustees do need to be properly educated and trained,” said Middleton.

Just-in-time training is a common approach by schemes, where trustees are given training in a topic shortly before assessing their options and coming to a decision.

Ian McQuade, client director at consultancy Muse Advisory, said schemes could benefit from mapping out all the areas they would have to cover over the course of the year, allowing trustees to see the topics they would need to understand.

“It’s a bit more than just in time,” he said. “When you’ve got a plan and a schedule for the year of what you’re going to cover, then making sure you’ve had the training, so the trustees understand... makes it engaging as people know it’s going to be relevant.”

Trustees can get more out of training by excluding their advisers from sessions, McQuade said.

“Some [trustee boards] refuse to allow any of their current advisers to come along to their training sessions so there’s a broader range of views expressed,” he said. “Bringing in a completely new party or organisation with a clear brief that this is not a sales pitch… can be a really interesting session, as they get a new view and feel better able to view the situation from a number of angles."

Trustees are increasingly willing to seek out and participate in education and training.

“Most trustees are very conscious of their knowledge and understanding, and they want to learn. They’re far more likely to go along to training and seminars these days,” McQuade said. “[They] like to learn in a situation where they’re not being so obviously sold to.”

Earlier this month the Department for Work and Pensions published a paper titled 'Better workplace pensions: Putting savers’ interests first'. One of the proposals includes the need for trustees to appoint a chair to produce an annual statement on scheme governance.

Butcher said an increasing focus on value for money would only increase the demand for trustee education.

“There will be an urgent need for training,” he said.