The Professional Trustee Standards Working Group has produced a draft series of standards for professional trustees after consultation with the pensions industry. They are expected to be formally published in April/May 2018. The standards are intended to improve the quality of professional trustees and eliminate poor practices. The Pensions Regulator supports the standards and will consider compliance with them as an indicator of fitness and propriety. The Working Group is also developing an accreditation framework which professional trustees will be expected to achieve, details of which will be published later on 2018.
The standards will be applied on a "comply or explain" basis. Professional trustees will be expected to describe how they meet each of the standards or explain why the professional trustee has not met particular standards. Employers and trustees who are selecting a professional trustee for appointment are advised to request to view this disclosure. Professional trustees will need to update their disclosure annually.
The standards that will apply to all professional trustees are set out in Schedule 1 of the draft and cover the following areas (with some examples):
- Fitness and propriety – fit and proper person
- Integrity – acts honestly and with integrity
- Expertise and care – carries out work with care, has relevant experience, skills and knowledge to discharge fiduciary duties as a professional trustee; undertakes a minimum of 25 hours' relevant learning and development a year
- Impartiality and conflicts of interest – ensures professional judgement is not compromised by bias or conflicts of interest
- Professional behaviour – acts in the best interest of members and respects the confidentiality of information
- Systems and controls – ensures there are robust control and governance structures in place, maintains adequate professional indemnity insurance, has appropriate fraud prevention measures and continuity of service processes in place
Schedule 2 of the draft covers additional standards for professional trustees who act as Chairs of trustee Boards and covers the following (with some examples):
- Board leadership – has the necessary skills to be Chair including the ability to lead, negotiate and achieve a consensus; sets the tone and provides strategic direction for the trustee Board as a whole; actively challenges advice; looks to achieve full participation and open discussions in trustee meetings and acts as the key interface with the employer and manages that relationship on behalf of the trustee Board
- Board and Chair quality – takes into account the resource constraints of different trustee Board members; monitors the Trustee Knowledge and Understanding of the trustee Board; implements a performance review process for the Chair, individual trustee Board members and the Board as a collective; promotes and seeks to ensure trustee Board diversity and succession planning
Schedule 3 covers additional standards for professional trustees who act as the sole trustee of schemes
The Appendix to the draft sets out trustees' fiduciary duties, how trustees might carry out those duties or delegate those to a third party and provides examples of what might be regarded as acceptable practice by professional trustees when managing conflicts of interest.