A new governance campaign launched by The Pensions Regulator (TPR) will increase the regulatory burden on trustees, an adviser believes.
The 21st Century Trusteeship – raising the standards of governance campaign has been designed to protect savers by improving governance across the pension savings industry.
But Lincoln Pensions chief executive Darren Redmayne fired a warning to the authors of the campaign that the initiative will increase red tape on schemes of all sizes, especially smaller funds struggling to manage budgets.
TPR said the initiative was launched over concerns that some trustee boards, mainly those governing smaller schemes, have failed to comply with the regulator’s governance codes.
TPR acting executive director for regulatory policy Anthony Raymond said there is a link between good governance and good fund performance. “Good governance is the bedrock of a well-run pension scheme,” he added.
“It is not a ‘nice to have’ but an essential part of effective scheme management – for all schemes.
“Pension schemes should have a skilled and engaged board, led by an effective chair, have robust risk management in place and good relationships with advisers and third parties.
“We have set out our intention to be clearer, quicker and tougher. This campaign is one of the ways we are delivering this commitment and I would like to see all trustees visit the new campaign web page to ensure they are doing all they can to safeguard their members’ benefits.
“We are now communicating our expectations more clearly to trustees. Those who fail to respond to our more directive approach may face further regulatory action.”
Redmayne added: “Perhaps obvious “winners” from this campaign will include the professional trustee and covenant advisory firms who, I expect, will see even more work come their way as lay trustees respond to these reaffirmed expectations.”
But River and Mercantile Derivatives managing director Mark Davies believes that firmer guidance will not be a problem for the majority of schemes.
“The consequences of not meeting the standards may be scary for others,” he added. “However I would say that, from an investment perspective at least, meeting these standards is not necessarily as difficult as it seems. We are big believers in education, so welcome increased education requirements.”
