The Association of Professional Pension Trustees supports the mandatory accreditation of professional trustees despite finding that the voluntary one has worked well. It cautions against “further onerous requirements being placed on lay trustees that could backfire”. 

 

Ahead of the closing date of a government call for evidence on trustee skills, capabilities and culture, the APPT has said it supports mandatory accreditation of professional trustees, which has been voluntary for the past three years, "to ensure consistent high levels of scheme governance” which “will enable the frameworks to be further enhanced over time”. 

 

The Department for Work and Pensions and the Treasury said that “our long-term vision is to have a smaller number of schemes, each with a professional trustee” and that “to ensure that such a requirement would not be open to misuse, we are considering whether there first need to be more rigorous requirements for those acting in the capacity of a professional trustee”, including mandatory accreditation. 

 

The APPT is supportive of mandating accreditation despite saying that the current regime has been successful. Accreditation for professional trustees “has proved a great success and is fit for purpose”, it argued, with close to 400 professional trustees accredited voluntarily. The APPT is one of two accreditation bodies and reviewed its accreditation earlier this year.  

 

“Amongst accredited professional trustees we believe that trustee requirements are well understood, and professional trustees recognise that they are held to a higher standard of care,” said Harus Rai, who chairs the association.  

 

However, the APPT is sceptical about putting more requirements on lay trustees, noting that already very few lay trustees have sought to be accredited under the voluntary lay trustee accreditation framework set up in 2021.  

 

While they may not be professionals in the field, Rai stressed lay trustees' role within the pensions system. “The broad range of skills, qualifications, and experience of lay trustees, together in many cases with their first-hand knowledge of the businesses that sponsor pension schemes, is a vast resource that has underpinned the good governance of most UK trust-based schemes over the last century and beyond and should not be underestimated,” he said. 

 

However, "knowledge and understanding of lay trustees could be monitored more closely by the Pensions Regulator, for example with an addition to the annual scheme return requiring confirmation by the chair of trustees that all trustees have met their TKU requirements”, Rai suggested. 

 

This echoes a suggestion made previously by the Association of Member Nominated Trustees, which suggested toolkit certificates should be submitted with scheme annual returns to evidence that all trustees had completed their basic training.  

 

The APPT is also in favour of updating the Pensions Regulator’s trustee toolkit, which TPR decided on following its 2019 Future of Trusteeship consultation, when it also dropped the ideas of requiring a professional trustee on each board, and demand qualifications or CPD for trustees.   

 

    

The APPT thinks if and when a requirement to have a professional on each trustee board is introduced, this should happen gradually over a few years, for example according to scheme size or category.  

 

Maggie Rodger, co-chair of the AMNT, said earlier this summer that it would be appropriate to require at least one trustee on a board to be accredited, with accreditation available, on the same basis, to both lay and professional trustees.  

 

“Clearly 100% would be difficult to achieve in practice as new trustees need some time to achieve this, but also some trustees may be appointed for particular skills with equivalent but different qualifications, and there should be a process to show equivalence,” she said. 

 

For Rodger, the key is in the definition of what constitutes a ‘professional’ trustee. “If 'professional' means someone who is employed as a trustee, then we do not believe there needs to be a career trustee on every board. If 'professional' means someone who is competent, experienced and qualified etc and who may be a lay trustee or a career trustee, then of course schemes should have someone who meets this description,” she said.  

 

This is because she believes it carries a risk of groupthink, and potentially also that professional trustees might not ask questions of advisers or asset managers because their livelihoods depend on appearing to understand.  

 

Not least, Rodger believes that such professionalisation of trustee boards would "add enormously to the fees extracted collectively from pension schemes”. 

   

    

Does the definition of ‘professional’ trustee need to be broadened?