Policy Lead for Investment & Stewardship Caroline Escott explains why, in its review of pension trusteeship and governance, The Pensions Regulator must target disengaged pension schemes rather than burden all with costly regulation.
PLSA members strongly believe that good governance is vital to ensuring well-run schemes and achieving good member outcomes. This is why one of the PLSA’s key policy priorities for 2019-2022 is shaping a regulatory framework which ensures schemes have the right people in place, who are supported by the right systems and processes.
We were therefore pleased to be able to respond to TPR’s Summer 2019 consultation on The Future of Trusteeship and Governance, the first step in TPR’s deep-dive into governance and administration issues over the next few years.
The consultation itself raised many interesting issues and challenges, from the need for greater diversity on trustee boards to the level of trustee knowledge and understanding required for trustees to be able to achieve good outcomes.
Because the issue of governance is such a hot topic amongst every shape, size and type of PLSA member, we undertook extensive discussions with the industry to inform our response. From surveying our Reference Groups, to holding a stand-alone policy roundtable, or discussing extensively with policy committees and having separate 1:1 catch-ups with governance experts, many PLSA members kindly gave up their time to contribute their expertise and insights.
A few things became clear over the course of our discussions. Firstly, that there was a desire for TPR to be more focused about the problem that it was trying to solve: that there is a difference in the scale and type of challenge presented by schemes which do not present with regulators or advisers (for instance, those which do not even fill out a scheme return) and others which are engaging but need to improve to ensure they achieve high quality standards. Such different challenges require different solutions and those schemes which are already well-run must be given the regulatory space to continue to thrive.
Secondly, that although trustees are a vital part of the governance value chain, there are other areas which warrant further TPR research and scrutiny. Chief amongst these is what effective and efficient executive support looks like across the pensions sector, whether there are pockets of schemes which are failing to achieve this and, if so, what more TPR or the industry should do.
The PLSA explored these issues, and several others, in a response to TPR submitted last week. However, this does not mark the end of the governance policy journey, but merely (perhaps) the end of the beginning. The PLSA looks forward to continuing to work with its members, the industry and policymakers to support good governance and well-run schemes of every shape and size.
Click here to access the PLSA's full submission to the consultation.