The Pensions Regulator (TPR) has announced its intention to launch a new strategy to drive up standards of trusteeship, aimed at bringing trusteeship into line with other professions and corporate governance standards.

This follows the announcement yesterday (5 June) of the Pension Schemes Bill, which set out a comprehensive set of government measures, including plans for a value-for-money framework and the introduction of increased flexibility for defined benefit (DB) pension schemes to release surplus funds.

It also builds on the final Pension Investment Review report, launched last week, which saw the government confirm plans to double the number of megafunds, by requiring all multi-employer defined contribution (DC) pension schemes and Local Government Pension Scheme (LGPS) pools to operate at megafund level, managing at least £25bn in assets by 2030.

TPR chief executive, Nausicaa Delfas, said trustees need to ensure they are ready for the “transformational impact” of the Pension Schemes Bill.

“Trustees lie at the heart of the pensions system. The decisions they take have enormous impact on the financial wellbeing of millions of savers. And as the system grows and evolves, so must the nature of trusteeship. What worked in the past, may not work for the future,” she said.

“We will be working closely with the government on their planned consultation on trusteeship and governance set to commence later in the year looking at the future regulatory environment to make sure it is fit for the future.”

Delfas set out five key traits she believes are “central” to good trusteeship including, being saver outcome-focused, capable of constructively challenging to avoid group think, highly skilled and diligent, agile and responsive, collaborative but accountable and data-led.

She confirmed that TPR will also look to other financial services regimes and corporate reporting standards – like UK Corporate Governance Code – to make sure that trustees have the time and independence to challenge group think.

In particular, she said that the changing pension landscape for trustees meant that in “a world of mega funds and superfunds” it must re-evaluate how the role can best serve savers.

“We don’t need to re-invent the wheel: after all, pensions are operating in a mature financial system,” she continued.

“But with responsibility for the financial wellbeing of millions of people in the UK, trusteeship needs to come into line with other professions and corporate governance standards.

“Learning from others and applying the best of analogous regimes within our own regulatory sphere of influence must be the goal.”

In addition to raising the standards, TPR aims to ensure that regulations deliver better outcomes, with TPR actively looking at how it can reduce any unnecessary regulatory load.

This move is part of TPR’s previously announced pledge to reduce unnecessary regulatory burdens and its shift to a more 'prudential' style of regulation.

She noted that TPR’s DB Funding Code had already set out a shift in its approach, with an expectation that around 80 per cent of DB schemes will be able to meet the code’s Fast Track approach.

This, she said, would result in less contact from TPR and lower regulatory burden on schemes through simpler reporting.

Delfas also explained that over the coming year, the regulator will conduct a broad review of its scheme return and supervisory returns, to rationalise and remove asks of the industry that are not directly related to good saver outcomes.  

“To focus our activity on where the greatest risk lies and let you focus on the task at hand – delivering for savers. Because, ultimately, protecting and providing for savers is why we are all here,” she said.

“To meet their needs, and the requirements of today’s Pension Scheme Bill we will all have to adapt and evolve. It is an incredibly exciting time for the industry. A time in which we must rethink what it means to be a trustee, an administrator and even a regulator.”

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