Torsten Bell: Our approach to overseeing and administering such large pension schemes needs to keep pace with a fast-evolving pensions system.
The government will work with the Pensions Regulator (TPR) and industry to develop a new trustee competency framework, the Department for Work and Pensions (DWP) has announced.
The announcement said the framework would set out the skills trustees need – including artificial intelligence, cyber security and the governance of very large schemes – so that trustees have a "clear benchmark to develop against".
The DWP said the changes would "empower" trustees to act effectively and independently on behalf of members as their responsibilities grow – enabling them to focus on delivering better retirement outcomes.
The announcement, which follows the DWP's consultation on trusteeship and governance last year, also said that master trusts, which it said had grown alongside auto-enrolment and were expected to make up most future megafunds, would be subject to a strengthened regime. Under the proposed changes, TPR will be able to step in before a breach of authorisation criteria take place, rather than after it has happened.
In addition, the government said it would also work with TPR to better understand the professional trustee market, while also engaging consumer groups and industry to develop governance arrangements that provide effective member representation and avoid conflicts of interest, maximising trust and confidence in the system.
And it said it would also require pension administration providers to register with TPR and meet mandatory minimum standards focused on data quality – a move it said would give trustees a firmer foundation to work from.
The DWP said these reforms will be taken forward at "the next legislative opportunity", with implementation "phased and proportionate to give the sector time to prepare".
Pension minister Torsten Bell said: "Bigger pension schemes will help deliver better outcomes for savers. Our approach to overseeing and administering such large pension schemes needs to keep pace with a fast-evolving pensions system. Members must be able to trust the people and systems managing their money.
"Thanks to the industry's engagement, we can act now. Behind every pension pot is a person planning their future, and we want them to feel confident it is in safe hands."
Raising standards
Pensions Management Institute chief strategy officer Helen Forrest Hall welcomed the government's continued commitment to strengthening governance across the pensions sector through stronger master trust authorisation and a practical framework of new minimum standards for administration.
She said: "Pensions are getting bigger, more complex and more important than ever. These reforms are a chance to raise standards, strengthen governance and make sure millions of savers get the outcomes they deserve."
Pensions UK chief policy officer Zoe Alexander agreed. She said: "The pension landscape is changing, and trustee boards need to evolve to reflect that. Trustees of megafunds need the right support and member input to govern schemes of growing and systemic economic significance.
"The pensions industry recognises where change is needed and we welcome the government's focus on collective board capability, stronger administration and raising standards without unnecessary prescription."
