New Standards for Professional Trustees

Professional trustees will soon become subject to formal standards and be required to demonstrate they meet these standards by acceptance as an accredited trustee.

On 26 February 2019, the Professional Trustee Standards Working Group (the PTSWG) published the final version of the formal standards which will become applicable to professional trustees.

The PTSWG

The PTSWG is the group which was set up early in 2017 as part of an initiative started by the Pensions Regulator (the Regulator) to develop a system of standards and accreditation for professional trustees. The Group consists of representatives from the Association of Professional Pension Trustees, the PMI, the Regulator, the Pensions and Lifetime Savings Association and also includes representatives of those who practice as professional trustees outside of corporate structures or firms.

The Proposed Framework

It is proposed that the accreditation framework will be managed by the Pensions Management Institute (the PMI), which has extensive experience as a membership organisation and a long-established understanding of trusteeship. The Association of Professional Pension Trustees will maintain the standards and oversee the accreditation.

The system is designed “to improve, and provide assurance on, the quality of professional trustees and discourage poor practices in the market.”^[1] In recent years professional trustees have had an increasingly important role to play in pensions and as professionals they need to have a greater level of expertise, knowledge and skills and meet a higher standard of care than lay trustees.

The Consultation

The first draft of the standards was published for consultation in December 2017. The consultation ran from 13 December 2017 until 2 March 2018.

A number of main themes came out of the consultation including:

• general support for having standards;
• a need to clearly distinguish between the new standards for professional trustees and those that apply to all trustees;
• a preference for an accreditation system rather than the “comply or explain” system which was originally proposed; and
• a request for the standards that are particularly difficult for sole trader trustees to meet to be reconsidered to avoid them having to leave the market.

The framework was reviewed following the consultation process with the finalised version of the standards being posted on the Association of Professional Pension Trustee’s website on 26 February 2019.

The Standards and Accreditation System

Under the new standards trustees will first have to pass an initial application to gain accreditation and will then have to meet the standards on an ongoing annual basis. The standards cover seven areas and will apply directly to individual trustees, rather than at trustee firm level.

To meet the initial accreditation requirements, applicants will need to:

• show that they comply with a “fit and proper” requirement modelled closely on that required for trustees of master trusts;
• provide references from two reputable figures in the pensions industry, such as an existing accredited professional trustee, pension lawyer or scheme actuary;
• have successfully completed the latest Regulator’s Toolkit;
• pass the PMI Level 3 Award in Pension Trusteeship; and
• complete an online skills test which is still in the process of being developed and which will be designed to assess the “soft skills” associated with professional trusteeship.

At present the proposals are that the ongoing part of the accreditation will require completion of an annual attestation confirming that:

• the trustee remains “fit and proper”;
• that they continue to adhere to the standards; and that
• they have completed any new or updated modules in the Regulator’s Toolkit and 25 hours of relevant Continuing Professional Development training.

Overall, there does seem to be clear support for the introduction of specific standards for professional trustees although the precise way in which this should be set up has been the subject of wider debate. The current proposals are for the accreditation framework to be introduced as from 1 July 2019 and those affected therefore need to begin considering how the standards and relevant accreditation will be met.

^[1] Standards for professional trustees of occupational pension schemes: Version 12, February 2019