Barnett Waddingham is urging the government to introduce ‘legally protected’ learning time for lay trustees as part of ‘proportionate reforms’ to strengthen, transparency, independence and decision-making across UK pension schemes.
These comments come in its response to the DWP’s consultation on trustees and governance.
BW says it is broadly supportive of the move towards more professional trustees or sole trustee models, which it says will help support more efficient decision making, manage costs and enhance expertise.
However, the consultancy and trustee firm adds that there is a need for structured trustee learning, given the consolidation across the pensions sector leading to fewer, larger but more complex schemes.
It says that this will mean decision-focused management information becomes increasingly important, particularly for when dealing with administration, cyber-risk, covenant and investments.
In its response BW also adds that trustee capability should be assessed at trustee board level, rather than on a trustee-by-trustee basis. While it supports the general move towards professional trustees, BW says there is still an important role for maintaining a material member voice in the governance process, but recognises this does not need to be via direct trustee responsibilities.
BW says that as the models for professional trustees have grown, it is only natural that the change of governance this brings requires a different set of safeguards and oversight. It adds that it supports the DWP’s efforts to review a different set of potential conflicts of interest that these governance structures can create.
It also adds its support for minimum administration standards based around existing regulation, and introduced over a reasonable timeframe, but warns against introducing overly burdensome registration requirements that could ultimately reduce market capacity.
Barnett Waddingham partner and head of pensions governance and secretariat Lucy Cresswell, says: ”The pensions landscape is evolving rapidly, and governance models must evolve with it. Our recommendations aim to strengthen independence, transparency and accountability – without creating barriers to effective trusteeship or member-focused outcomes.”
“We must also ensure that member voice is not diluted as schemes transition toward professionalised governance structures, especially given the continuing reduction in numbers of lay trustee appointments.”
David Barnett, partner and head of corporate sole trustee at Barnett Waddingham adds: “The growth in more professionalised trustee models is a natural output from greater consolidation. These professional trustee models can bring greater pace of decision-making, expertise and efficiencies.
“However, it also means the oversight and reporting requirements of more traditional lay trustee boards may no longer be appropriate for these growing alternative governance approaches.
“Therefore we, as do many trustee firms, support the plans to consider independent review mechanisms and greater reporting transparency, to maintain trust and robustness in trusteeship.”