Trusteeship is a critical aspect of the pension industry, and it is becoming increasingly important in the current landscape. Pension scheme trustees are responsible for overseeing the management and administration of pension schemes and ensuring that members’ interests are protected. As the industry moves into 2023 there are a number of issues that are making Trustees feel overwhelmed. We have taken the time to speak with some of the trustees of our pension scheme clients and understand that these challenges are going to be important but difficult to accomplish.
One of the challenges facing trustees in 2023 is the increasing complexity of the regulatory environment. Over the past few years, there have been a number of regulatory changes that have been implemented, and there seems to be no sign of this slowing down. As the regulatory environment becomes more complex, trustees are required to have a greater understanding of the regulations and the implications for their scheme. This means that trustees need to invest more time and resources in training and development to ensure that they are equipped to fulfil their responsibilities effectively, which may be difficult as they are already investing a lot of their time into the day to day running of their schemes. Managing Director of Zedra Governance, Kim Nash, has said “one of the biggest challenges as a trustee is striking that balance between compliance and strategic thinking.”
This sentiment has been reflected in our own research into the pressing challenges that Trustees are facing. Towards the end of last year, we carried out a client listening exercise where Anna Lake sat down with our clients and interviewed them to learn about their experience with Assure UK and the industry. Many clients mentioned the increased effort required to keep up with the new governance with the Single Code which can be difficult. We’ve written A Straightforward Guide to the Single Code of Practice which you can find here.
Trustees are also facing pressure to address climate change risks and integrate environmental, social, and governance (ESG) factors into investment decision-making. Pension schemes are long-term investors and have a significant impact on the economy and society. As such, trustees are expected to consider the wider impact of their investment decisions and ensure that the schemes they oversee are sustainable over the long-term. This requires a deep understanding of ESG factors and the ability to assess the impact of these factors on the scheme’s investments, which again will take their time away from the other important aspects of running their schemes. We’ve explored deeper into this subject with our blog on ESG and Climate Change: Regulations, Guidance, and Challenges for Trustees.
Striking a nice balance between compliance and value for money will be important for pension scheme trustees. The industry needs to be innovative to ensure that it can keep up with the constant increase in red tape and also ensuring that members are supported as they move through the cycle and head towards retirement. Trustees should also ensure that that they tap into the resources that are available to ensure that they can keep up with the demands of the industry.