In October the Pensions Regulator published its Trustee Landscape Quantitative Research.
Much of the detail will be familiar to trustees and their advisers, such as an acknowledgement that training is available but often not taken due to lack of time.
However, the report also highlighted concerns which included the likelihood of more governance risk with smaller schemes and an improvement of governance arrangements with purely professional trustees appointed.
This is not to say that the Regulator felt that lay trustees were unable to provide a good level of governance, but, perhaps unsurprisingly, the variation was much greater amongst lay than professional trustees.
The report set out the findings of the research which had been carried out on an objective basis, rather than setting out any policy or conclusions that the Regulator had made or drawn.
Much has been made in the press of this distinction between governance of schemes administered by professional trustees as against those administered by lay trustees, with the renewal of suggestions that perhaps the future of the industry is for schemes to have professional trustees only. There does appear to have been a move in the market towards sole trusteeship by a professional trustee (which exempts the scheme from the member nominated trustee requirements) and this report certainly provides support for that trend.
Another point that was less widely reported was that the pure defined contribution (or “DC only”) schemes fell furthest short of the Regulator’s ideas of good governance. For instance, 9% of DC only schemes never held board meetings at all. In addition, schemes with both DC and DB elements spent only about one-sixth of their time on DC rather than DB issues. Whilst this may not surprise anyone who has been involved in such schemes, it does highlight a growing concern caused in part by the historical disparity of the high levels of regulation of a wide range of DB activities and the lower burdens in relation to DC only schemes, including as to the process of selecting investment funds for a DC arrangement. The growing focus of the Regulator and the legislators on defined contribution over the past few years reflects this concern. The ongoing consultations from government relating to the governance of defined contribution arrangements reflects a need to ensure that the increasing number of members reliant on a DC fund for their retirement are properly protected.