Trustee toolkit online learning
Go to the Trustee toolkit We provide a free online learning programme called the Trustee toolkit which you should complete, unless you arrange the equivalent learning. You must log in or sign up to use the Trustee toolkit.
Skills and experience – why is this so important?
The people on your trustee board should have the skills, knowledge and experience to run the scheme well, and these skills should work as a whole for the board.
It’s the law for trustees to be ‘fit and proper’ and to have the relevant knowledge, understanding and competence to do their job, and we expect them to act honestly and with integrity.
When you’re recruiting new trustees to be part of the board, you should if possible work with your employer and look at whether prospective candidates are honest, competent, financially sound, and whether they appear to act with integrity.
You should consider what type of trustee they are (eg member-nominated, employer-appointed, professional), the skills and experience they have (including soft skills such as the ability to negotiate, influence and communicate), and societal demographics (eg race, age, gender). If you have a well-balanced and diverse board, it should be more effective.
The power of appointing new trustees often sits with the employer, but existing trustees should give advice on the needs of the board. Succession plans should reflect the size and complexity of the scheme and take into account the strengths and weaknesses of the board, with the aim of selecting individuals who’ll fill any gaps identified. Maintaining a skills matrix will help identify gaps and inform succession plans.
You should annually evaluate how effectively the board is performing, referring to the objectives you set in your business plan. This will help you monitor your progress, and it’s particularly important for schemes offering money purchase benefits as they have to report annually in their chair’s statement how the board collectively has access to the right knowledge and understanding to run the scheme. You should consider filling any gaps by organising relevant training for the board, seeking advice or co-opting resources to the scheme.
Skills and experience – improving the way your scheme is run
Lack of soft skills
A trustee board lacked ‘soft skills’ and experience – for example, one trustee was very dominant at board meetings and often stopped others from speaking. This prevented the board from finding common ground and often hindered decision-making.
The board agreed to a review which resulted in re-shaping the board and training on skills gaps where other trustees lacked the knowledge to be part of certain discussions. This new focus on behaviours improved the board’s ability to manage the disruptive trustee.
Taking action following constructive feedback
The trustees of a scheme were objective and open to criticism. The chief financial officer of the scheme’s employer attended a board meeting and challenged the trustees on their record-keeping, which related to their last scheme valuation. They had not fully recorded the thinking behind some of the decisions they’d taken and this had made it very hard to understand their strategies.
The trustees accepted that this needed to improve and made plans to record adequate detail of their reasoning for decisions in the future.
Maintaining good work
Focus on behaviours
All trustees were involved in the chair selection process, and there were a number of professional trustee candidates with varying experience. It was the view that, based on the existing board’s behaviour and experience, they didn’t want to recruit a dominant personality, but someone who had the ability to bring the board together. One candidate had an excellent CV and was very experienced, but during the selection process they showed very dominant behaviour traits which didn’t fit with the board.
The successful candidate demonstrated experience of effective management of advisers, bringing people together and delegation which are key skills for a chair.
Following the assessment of individual trustees on a board and the development of a matrix, the board discussed the objectives in the business plan for the next three years. This was to identify which events they needed to prepare for, and whether the board collectively possessed the right skills and decision-making abilities to deal with them. The board then prioritised the most important requirements for the board and scheduled appropriate training for the board in the annual planner.
Check your governance
- Do you have a policy to assess whether new trustees are fit and proper?
- Does your trustee board spend an appropriate amount of time running the scheme, proportionate to its size and complexity?
- Does the trustee board as a whole possess, or have access to, the knowledge, understanding and skills necessary to properly run the scheme?
- Do you have diverse membership on your board, for example, members with different backgrounds, experience, skills and demographics?
- Consultation on professional trustee standards on the Association of Professional Pension Trustees website
- Guidance on preparing a chair’s statement
- Guidance on appointing trustees
- Guidance on achieving the right composition for your board, appointing trustees to the board including assessing fitness and propriety, and succession planning (this guidance has been drafted for schemes with money purchase benefits, however others managing pension schemes may find it useful)
- Check you are running a quality DC scheme
- Code of practice 8: Member-nominated trustees / directors – putting arrangements in place