Voluntary accreditation of professional trustees will act as a quality mark and drive up scheme governance standards, argues Lesley Carline.
In the wake of The Pensions Regulator's (TPR) consultation response, it is probably time for some reflection around the purpose of trustees in todays pensions landscape.
The modern trustee is usually a board director of a trustee company whose remit is to deliver good member outcomes, whatever shape that may be. There is an expectation the trustees will have a degree of pensions knowledge gained through undertaking the Trustee Knowledge and Understanding (TKU) toolkit, and perhaps the Pensions Management Institute's (PMI) Award in Pensions Trusteeship (APT), supplemented by on-the-job training. The experience part is often supplemented by using professional trustees on a board.
A trustee board requires a mixture of skills and experience to be effective. Much of the attention focused on trustees appears to be about their knowledge; the more knowledgeable they are the more successful they will be. This no longer stacks up as the only measure of effectiveness.
It is quite interesting to see the response to the Professional Trustees Standards Working Group and the voluntary accreditation process. This requires professional trustees to undergo a process whereby they confirm their pensions knowledge via the TKU and the APT, provide evidence they are fit for purpose, but also undertake the PMI's Certificate in Pensions Trusteeship to demonstrate their softer skills.
During workshops undertaken by TPR, the Association of Professional Pension Trustees, and the PMI, invariably a professional trustee who has been qualified as an actuary or a lawyer for decades would question the need for accreditation and specifically the soft skills test. After all, they have been advising trustees for years - surely that qualifies them to be a trustee?
Not quite and it is a naïve and disappointing attitude particularly given the purpose of the accreditation process is to drive up standards. The question shouldn't be ‘why should professional trustees undertake the accreditation process?'. It should be ‘why wouldn't you take it?'.
The softer skills test is key to demonstrating the skills required to work alongside other trustees - that they have the necessary empathy, understanding, leadership and decision-making capabilities that go alongside their knowledge and experience.
The PMI exams are part of the OfQual framework. This means they are operating in an independent quality monitoring and auditing system, as opposed to being purely set up and monitored by the industry, for the industry. The independence of the quality control stands as testament to the PMI's commitment to a quality qualification and demonstrate our commitment to helping pensions professional drive up standards.
In the summer of 2019, Professional Pensions asked whether, if you were appointing a professional trustee, you would expect them to be accredited - 80% said yes. It is only a minority of professional trustees who are resistant to the accreditation, and many of their peers have taken the APT in preparation for its launch. A select few volunteers have already undertaken the CPT as part of a pilot test and the booking process is now open for the live CPT exams. Participants of the pilot felt the CPT Unit 2 was very worthwhile undertaking and really made them think carefully about their responses.
Accreditation is currently voluntary but we hope that it will become the quality mark of professional trustees. Ongoing CPD is a requirement but given the seminars and training sessions out there, not to mention the PMI's own technical output and events, this should not be onerous.
In terms of lay trustees, TPR will be looking to test and check their pensions knowledge. The PMI has over 1,200 trustee members and we believe we have a duty to support them by providing the education, training and tools needed to fulfil their role. We will continue to carry this out alongside providing the professional trustees with an accreditation process to be proud of.
Lesley Carline is president of the Pensions Management Institute
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