Effective pension scheme governance is a necessity for any well-run scheme and is an area the Pensions Regulator scrutinises closely. It covers a broad spectrum of controls that together build a framework to help Trustees create, manage and realise their long-term objectives.
For scheme governance to be effective it has to be constantly managed and assessed in a proactive way – it should not be a tick box exercise once each year. If managed in this way, it can have a significant positive impact on the ongoing management of the scheme.
Here are the five key areas we believe trustees need to focus on:-
- Business Plan and Risk Register
The benefit of the Business Plan allows Trustees to see at a glance all projects to be undertaken over the year and to set deadlines to ensure these are being met. The Risk register highlights the current controls in place for running the scheme and alerts Trustees to any action required by them. Both should be active documents, reviewed and regularly updated.
- Member Communication
Communication with Trustees and members is paramount, especially to keep abreast of legislative changes. It is important that all communication is jargon free and tailored as much as possible to suit individual requirements.
- Trustee Training
The Trustee role is complex and training is key to helping Trustees make informed decisions. Structured training can help Trustees comply with their Trustee knowledge and understanding obligations, and means a well informed Trustee that has the knowledge to make timely and appropriate decisions.
- Collaboration between all parties
Making sure you have the right people to run the scheme is important. All parties should work in collaboration to achieve a common goal.
- Secure and Integrated Tools
Electronic documentation and instant access to information is the future. Good scheme governance requires access to the most up to date information to allow decisions to be made quickly. On line platforms can make this happen and trustees should ensure they have access to this information in a secure environment.
It all comes down to structure
Trustees should identify governance requirements, and create a framework for monitoring and managing pension scheme governance going forward.
It can be difficult to keep up to date with the multitude of legislative requirements and regulatory guidance associated with running a scheme – a good governance structure helps ensure compliance.