There is a worrying lack of pension qualifications among trustees and pension professionals, a new survey by mallowstreet has shown. Does this need to change? How important are trustee qualifications really? 

 

Most of the 200 pension trustees and professionals surveyed by mallowstreet have just one professional qualification – typically, this was the TPR Toolkit, with 71% saying they had this. Fewer than a third (30%) had the Pensions Management Institute Certificate, and a tenth said they have no accredited qualifications at all.  

 

Even though most of those surveyed have a limited number of qualifications, only 10% of respondents said trustee training was one of their three top priorities for the next 12-24 months. 

 

The survey was conducted in conjunction with the PMI, the Association of Member Nominated Trustees and the Pensions and Lifetime Savings Association.  

 

PMI set to introduce more tests 

  

The PMI is involved in the development of an accreditation framework for professional trustees, which will require technical knowledge as well as a 90-minute multiple choice exam with 60 questions on soft skills, such as negotiating, managing a team and prioritising. The accreditation framework and soft skills exam are expected to be available this month, following a pilot study. 

 

“One of the things... [that] distinguishes professional trustees from lay trustees is this issue of soft skills,” said Tim Middleton, director of policy and external affairs at the PMI. “We need to assess more than just technical knowledge... but it’s also way that applicants can demonstrate that they have the professional skills that are very characteristic of a good professional trustee.” 

 

The Pensions Regulator is trying to push up standards of trusteeship, with a clear threat of consolidation if this does not happen. In July last year, it issued a consultation on the future of trusteeship. At the time, its executive director of regulatory policy, analysis and advice, David Fairs, said: "If trustees cannot meet the standards we expect, we believe they should wind up and consolidate savers into a better run scheme.” 

 

Middleton thinks it is possible that the regulator could introduce a qualification requirement or CPD scheme for professional trustees if it considers that standards are not improving sufficiently on a voluntary basis. 

 

However, for lay people, there should not be too many barriers to becoming trustees, he stressed, although a minimum level of commitment, understanding and ability still needs to be evidenced.  

 

“It’s simply not good enough for people to come onto a board without ever understanding exactly what the responsibilities are, without having any real understanding of their role as trustees,” he argued. 

 

Middleton found it concerning that training is not a top priority for trustees, as “it's a demanding and challenging role”, and for trustees to feel confident that they can challenge their advisers they need enough understanding of the subject matter. “It is disappointing and quite worrying that only 10% identify [trustee training] as a priority,” he said. 

 

Should you have to study trusteeship? 

 

Among professional trustees, opinions are divided. Managing director of trustee firm PTL, Richard Butcher, said a professional trustee should have a relevant first qualification in a discipline like accountancy, law or investment, as well as a full CPD record that they are willing to disclose. 

 

“Requiring professional trustees to have a higher qualification is not an unreasonable proposition,” he said. “The standard of care expected of professional trustees is higher and should be, and so our ability to demonstrate that should also be higher.” 

 

Butcher compared trusteeship with professions such as law, accountancy or independent financial advice, for which people have to study for years and sit numerous exams, saying it was “ridiculous” that there are no minimum standards for professional trustees at the moment. 

 

“Absolutely the intention should be, and I completely support the regulator if they were to do this, to drive up the quality” of professional trustees, he said. Lay trustees should also be asked to adhere to a minimum standard, he said, which needs to be monitored. 

 

Is ongoing training more important? 

 

Some argue that ongoing training is more important than a qualification.  

 

“I’m a big fan of ‘just in time’ training,” said Michael Clark, managing director of CBC Pension Services, explaining that a trustee meeting should allow time for training or a refresher on a relevant upcoming matter as required. 

 

For Clark, the TPR Toolkit forms a baseline. He also said that “qualifications alone are not a sign of being a good trustee. A lot is down to experience.” However, he believes it is “certainly possible” that TPR could impose a qualification requirement if it feels that the voluntary approach is not working. 

 

For lay trustees, the TPR Toolkit might remain all that is needed for now. Some say additional qualifications might put people off the role; Ian Clarke, a trustee at the Yell Group plc Pension Plan, said it is already difficult to be an MNT, hold down a day job and accommodate training. 

 

A low barrier to entry is therefore needed, he argued. “If you want trustees who are not from the adviser background, then it is important to keep the doors open.”  

 

Clarke also hinted that there could be a rise in the fees of trustees if qualifications are driven up. “One thing I can say, being outside the London bubble, is that too many people are charging too much for their services, and ultimately the sponsors and members are picking up the bills,” he said. 

 

Are increased qualification requirements for trustees overdue, or will this push up costs?

Ian Clarke

Michael Clark

Richard Butcher

Tim Middleton

 

 

Neil McPherson

David Weeks

Caroline Escott