There are still huge numbers of trustees who are “not fit for purpose”, according to The Pensions Regulator executive director for DC Andrew Warwick-Thompson.

Speaking at the Pensions Age Autumn Conference on Friday 11 September, he discussed the Regulator’s research into whether the trust-based model is the right one. He said it is a model that has been around more or less forever but since 2004 the Regulator has been engaged in education and enablement.

“Research shows that whilst some people are doing a very good job of getting themselves educated and enabled to do the right thing, there are still a huge number of trustees out there who are frankly not fit for purpose,” Warwick-Thompson warned.

He noted the lack of competence tests for trustees, which was something that shocked the Regulator’s new CEO Lesley Titcomb.

He said that the Regulator started research into understanding how trustee boards operate and comparing how trustee boards of differing types of schemes, such as DB and DC, operate.

The Regulator has spoken to around 800 trustees as part of the qualitative research and is analysing the information to see what support it can give to trustees.

He said they are asking if the “educating and enabling” aspect of trustee training works because despite it, there are still trustees that are not up to the job.

Commenting on the research the Regulator has found so far, Warwick-Thompson said in the DC space, “bigger is better”.

He said larger DC schemes being used for auto-enrolment do better than small schemes when it comes to meeting the standards that it believes are necessary for good outcomes for savers. Trustees of larger schemes have told the Regulator that they are better able to scale up to meet demand.

However, the research suggests that trustees of small schemes spend considerably less time on their duties and are less likely to have the support of external advisors. In addition, they are much less likely to meet the knowledge and understanding code and are less prepared for the changes to DC regulations.

The research also found that trustees accept a knowledge of pension scheme investment is important, but feel less confident in what they know. Trustees in small schemes and DC schemes had the lowest levels of confidence.

He said the research will be published throughout the rest of the year.

Share Story: