Data and Investment Consult

From 2012, the government’s new reforms regarding the pensions industry will be enforced, with all UK employers obligated to enrol their employees into a pension scheme. The impact on the industry has already taken effect, and within this new and changing context, job roles are changing. In particular, the role of the independent pension trustees has been assessed by the government and new guidelines have been issued clearly delineating their role and stressing their importance in the industry. In accordance with their changing role, the criteria for registering and remaining on the Register of Independent Trustees was laid out by the Pensions Regulator in 2008 and this year it launched its 2011 education drive, with an aim of “highlighting the importance of administration in enabling good outcomes from pensions saving”. With an increased importance on administration, the role of the independent trustee as a source of professional, impartial advice as well as their active contribution to scheme governance has become important in the continued effort to keep struggling pension schemes buoyant.

Elected by members or appointed by management, independent trustees are subject to strict monitoring by the Pensions Regulator. Unlike lay trustees, who often take on the role outside of other job positions, the role of the independent trustee is in a full-time capacity, with professional responsibility as trustee of a scheme. His or her role is to offer impartial and expert advice, based on detailed market research, in order to evaluate and administrate a scheme in a way that keeps the interest of its members in mind. This is particularly important when a scheme is facing insolvency, as part of the independent trustee’s job is to assess a company’s assets and liabilities and deal with the eventual distribution of these assets. With this new level of responsibility, it is significant that independent trustees remain just that; independent, so that they can ensure impartiality and facilitate the avoidance of conflicts of interest within other trustee members.

With the industry facing major changes, the emphasis has shifted to the administration and governance of pension schemes in order to ensure their cost-effective running. The role of the independent trustee has become a vital part of this finely balanced equation, particularly in heading up the PPF assessment period in cases where pension schemes are struggling or facing insolvency.