The Association of Member Nominated Trustees (AMNT) has called on the UK government to help lay pension fund trustees reach their full potential. It has produced a set of recommendations aimed at supporting lay trustees and raising standards, following a consultation and discussions with its members.
The AMNT said this research is timely as the view that some lay trustees are performing at a level below what is required and that every board therefore needs a professional trustee have been expressed.
“The association strongly disagrees with this generalised dismissal of lay trustees and their value,” it added.
Rather, AMNT believes that if some boards are not operating as well as they could, the solution is to find what barriers exist that prevent lay trustees from operating at the optimum level and to address those impediments.
The association has concluded that for all trustees to perform at the highest level requires intervention. Not merely in relation to trustees directly but also to ensure that employers enable trustees to be properly trained and have time made available to carry out their duties effectively.
AMNT suggested that, rather than a mandatory professional trustee, every pension scheme should have at least one accredited trustee on the board, either lay or professional. Pension schemes and scheme sponsors should encourage all trustees to attain accreditation.
The association has highlighted key issues that need to be addressed and will be making proposals to government and the regulator on how best to improve the support available to trustees.
Janice Turner, founding co-chair of AMNT and author of the recommendations report, said: “Member nominated trustees (MNTs) remain as important now as they were in 1995 when, in the wake of the Maxwell scandal, the government brought in legislation requiring them to constitute a third of trustee boards of company pension schemes.
“It is said that those who do not learn from history are doomed to repeat it. Downgrading the role of member nominated trustees, whose only interest is the best outcome for members, would seem to be a retrograde and potentially harmful step.”
She also noted that if every board is required to employ a professional trustee there is potential for increase in costs, a lessening of diversity allowing “more opportunity for ‘group think’ to creep in, and the loss of years of knowledge and real-world experience that MNTs bring to the table”.
Some of the AMNT’s recommendations include:
- lay trustees should be given a statutory right to a specific minimum number or formula of days away from their day job to enable them to carry out their trustee duties, training and preparation effectively;
- every pension scheme should be required to send The Pensions Regulator the Toolkit completion certificate for every trustee. This would increase compliance with regulations, which have not generally been enforced;
- pension schemes and scheme sponsors should be compelled to support and encourage trustee training and pay for recognised examinations, and fees for training;
- every pension scheme should have at least one accredited trustee on the board, either lay or professional.
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