A well-run pension scheme is based on a foundation of solid governance with a robust regulatory framework playing a key role in shaping this.
However, the increasing number of regulations that lay trustees have to keep up with and the time commitment this requires, in addition to carrying out their day job, is not insignificant. The role is certainly not getting any easier.
Schemes must avoid paying lip service to change
Take, for example, the new Effective Systems of Governance (ESoG) and Own Risk Assessment (ORA) requirements which, although extremely important, are absorbing a significant proportion of trustees’ time.
Well-funded schemes are able to factor in responding to these requirements, but smaller schemes with limited resources may find it harder to allocate the appropriate time. This creates the danger of simply paying lip service to change and treating regulation as a tick-box exercise without fully engaging with its implications.
Ultimately, governance is there to manage risk, and taking shortcuts to save in the short-term is never wise if it stores up bigger problems for the future.
Trustee succession planning
These extra time commitments are particularly challenging for any lay trustee who also has a day job to consider. While they are not expected to be experts, they do need to feel comfortable that they have the right information and support structures in place.
Thankfully, help is at hand through in-house pension teams, advisers and, of course, professional trustees, with an increasing number of schemes appointing the latter.
As well as helping schemes deal with increased regulation, professional trustees can also help by co-ordinating the day-to-day governance, delivering value for money through effective use of advisers and being proactive in bringing fresh and innovative ideas to the table to help meet strategic goals.
With the emergence of continuous governance making it increasingly difficult for schemes to find trustees with the time and energy to dedicate to scheme business, demand for member and company-nominated trustees has been outstripping supply for some time now.
Mounting levels of regulation, particularly post-pandemic, means the demand on trustees’ time is ever increasing and may act to deter people from coming forward for such roles. This makes it even more important for businesses to consider succession planning to help manage increased regulation over the long-term, with advisers always on hand to help here too.
Learn more about how professional trustees can support your pension scheme needs here.
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