LONDON (10 February 2020) – Aon, a leading global professional services firm providing a broad range of risk, retirement and health solutions, has commented on the ‘Future of Trusteeship & Governance’ consultation response, issued today by the Pension Regulator (TPR).
TKU and governance structures
Susan Hoare, partner at Aon said:
“There is much to consider in this consultation – and some of the concepts will be considered controversial. However, we do welcome the revision of the Trustee Knowledge & Understanding Code of Practice (TKU). The current one is 11 years old and much has changed in that period. Our hope is that TPR takes this opportunity to connect the minimum requirements for all trustees with the combined skills and knowledge of the whole board. Our view is that this is a better model - it recognises the breadth of a trustee’s role and that each trustee will contribute something different.
“This model also reflects the value of having a board made up of diverse individuals. It’s worth bearing in mind that for some trustee boards attracting anyone to carry out the role is the first challenge and not just whether the candidates bring diversity to the board. In these situations, it may be that a professional trustee can add to the diversity of the existing board. Having said this, we are strong believers that cognitive, skill and diversity of personality allows decisions to be made from a range of different perspectives and thought patterns - which in turn improves effectiveness. The first stage is to understand the diversity, skill and personality of the existing trustee board.”
Susan Hoare continued:
“Overall our view is that focusing on broader and softer skills is the way to go. But to be able to demonstrate a full variety of broader skills across their board, trustees will need to start attracting individuals with skills that are different to their own.
“Following an assessment of existing skills, this process moves on with the communications that are used to attract member nominated trustees (MNTs). Carefully worded member election or selection communications that are clear on the skills valued in a candidate (and would complement the existing board), are more likely to start attracting more diverse candidates. And that simply means different people compared to those who may currently put themselves forward for the role.
"It’s also worth noting that the 15 hours per annum training suggested here by TPR is possibly greater than many trustees are currently managing. What is particularly important is that those 15 hours of training really add value, with a choice of good quality, relevant training options available. Otherwise, this becomes yet another compliance requirement with the associated extra cost and time constraints."
DC Consolidation
Tony Pugh, EMEA DC Solutions Leader at Aon, said:
“Another key area in the consultation is around consolidation of small schemes. Taking lots of them into a master trust goes a long way to addressing the capacity issue that TPR calls out as being the barrier to requiring all trustee boards to have a professional trustee. Potentially, this is the enabler that will allow them to make this change.
"Master trust is a model that offers many advantages including economies of scale and access to leading communication and engagement tools. As such, consolidation into a master trust, once achieved, will be of benefit to employers and members alike."
About Aon
Aon plc (NYSE:AON) is a leading global professional services firm providing a broad range of risk, retirement and health solutions. Our 50,000 colleagues in 120 countries empower results for clients by using proprietary data and analytics to deliver insights that reduce volatility and improve performance.
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