Five less considered risks
Less obvious risks trustees should watch out for
What happens when a long-standing trustee resigns from the scheme, leaving a huge knowledge gap? “We maintain a structured training programme. All trustees are given training for Pensions Management Institute exams and The Pensions Regulator’s e-learning programme,” says Tony Deeley, member-nominated trustee of GKN Group’s pension scheme.
GKN Group’s trustees are assessed regularly, complete anonymous feedback sheets which allow them to ask for more training in specifi c areas, have regular catch-ups with the trustee chair about their training needs and complete a training log, says Deeley.
THE SPONSOR COVENANT
Trustees should ensure they have regular meetings with their scheme sponsor to ensure the covenant remains in good health.
For more information, read Engaged Investor’s guide to maintaining a strong covenant: http://tiny.cc/gg5p9.
Because this is a very technical area, trustees are likely to rely on their actuary’s recommendations. However, trustees should have sufficient training to challenge their scheme’s actuaries and be confident with the assumptions they are making.
“Trustees will, to a certain extent, be reliant on third party providers to prevent fraud. But they should be asking appropriate questions of those providers as to the effectiveness of those controls, and the obvious one: has a fraud been perpetrated in your organisation in the last 24 months? The provider’s not necessarily going to tell them unless they ask the question,” says Ian Bell of Baker Tilly.
Clean data and good processes are vital for trustees hoping to insure their scheme with an external company. Normally trustees rely on a third party administrator or internal team to deal with administration, but it is their responsibility to ensure administration is well-run.