How to take a proactive approach to decision-making
Ensure good knowledge, experience and understanding
The trustee board should evaluate the skills it needs to manage the scheme efficiently and to a good level of governance and seek to recruit individuals from the membership and the sponsor with appropriate skill sets.
The trustee may need to consider appointing professional trustees to support the board if it cannot secure the appropriate skill set mix internally.
Trustees must receive adequate training to build knowledge in the many specialisms across the pensions landscape. Pensions is a very technical area that is subject to a material amount of legal and regulatory oversight.
The trustee should ensure it receives strategic management information on a frequent basis to ensure it can monitor the scheme’s progress against the strategic plan.
This should be the 'flight dashboard' that helps the trustee assess whether the scheme is on course or not. Trustees are not expected to be subject experts, that is the role of advisers and asset managers.
However, better informed, experienced and well-organised trustees are more able to challenge advisers where necessary and typically make better decisions.
Trustees should have a clear understanding of their powers under the trust deed and rules, which defines what they can and cannot do. They should seek legal advice where they believe there may be ambiguities regarding how the rules should be interpreted.
The Pensions Regulator's code and guidance on trustee knowledge and understanding is a good place to start.
Seek quality advice
The trustee should ensure that it has quality actuarial, legal, investment and covenant advisers in place to support its management of the scheme.
Decision-making is complex, but getting the right governance framework in place will help drive outcomes.
- Make sure your scheme governance framework is fit for purpose
- Put in place a team with the required skills and experience
- Seek quality advice from experts to support the team's understanding