Pensions news

Week ending 5 July 2019

The future of trusteeship and governance

The Regulator has launched a consultation asking for views on how the trustee model could be improved to reduce the number of poorly governed pension schemes. The Regulator believes that, if trustees cannot meet their standards, those schemes (typically smaller ones) should be consolidated into better run schemes. The Regulator acknowledges that its 21st century trusteeship campaign did not see significant improvements in the level of trustee engagement. The main questions covered in the new consultation are:

  • should there be an accredited professional trustee on every board?
  • are sole trustees on a pensions board able to run pension schemes appropriately?
  • how can barriers to consolidation be removed?
  • should a legal requirement be brought in for trustees to meet minimum standards of knowledge and understanding and ongoing learning?
  • how can diversity on pension scheme boards be improved?

The Regulator has also published a blog explaining why it is pushing smaller schemes to consolidate and how its new approach to regulatory intervention aims to challenge the disengaged trustees of underperforming schemes.

Going greener

As part of their Green Finance Strategy, the Government and the Pensions Regulator have co-established a working group to focus on climate change. This group will produce guidance for pension schemes on climate-related practices across four areas – governance, risk management, scenario analysis and disclosure. The Regulator expects to consult on this guidance in late 2019, with a view to putting a final version in place in 2020 as part of its Governance Code.

Third buy-in for Smiths

The Smiths Industries Pension Scheme has completed a third buy-in for £176 million with Canada Life. The buy-in covers the benefits for approximately 2,000 pensioners and dependants, or around 6% of the Scheme’s liabilities.