Trustee board performance: what reviews are we seeing?

Topic:

Legal & governance

Date published:

Monday, 3 June 2019

Author:

Clare Owen

I think it is safe to say all the pension trustees and pension managers I’ve spoken to have different views on what they’re looking for from an external review of their trustee board’s performance. Yes, reviews can be driven by budget and time constraints, but I’ve found there are so many other factors. What is common though is getting the most out of the trustee board review is important.

Feedback drives change

Creating an environment that allows open and honest comments and input from all participants is key to making any review a success. Completion of questionnaires or comments taken at one-to-one meetings must be on a confidential basis. From experience, I know when given this type of opportunity pension trustees will often provide invaluable insights and comments that often drives change.

To be effective, a trustee board performance review must be far more than a box-ticking exercise looking at governance procedures and processes. You’ll get far more out of it by looking at board behaviours, dynamics and leadership – and learning from the world of corporate governance.

As a result, feedback from trustee board effectiveness reviews can sometimes be quite sensitive. It’s no surprise then, when choosing a provider for an external assessment, pension trustees are looking for:

• someone they can relate to;
• who has the gravitas to discuss the way people work together; and
• the ability to challenge current ways of working whilst setting out the rationale and benefits of change.

What are schemes doing?

If it is the first time the pension trustees have done a board review, we tend to see more fact-finding so they can educate themselves on what activities are typically included and what value they can bring. Some are looking for a self-assessment questionnaire approach, followed up by a results workshop combined with governance training and market/best practice insights.

Where the trustees have done several reviews before, I find they may be looking for a fresh pair of eyes, to focus on some follow up actions from the last review or probe a specific area.

Some trustee boards do perform annual reviews to benefit from continuous improvement – in line with the Pensions Regulator’s expectation - but don’t always take the same approach to each one. For others, a review can be driven by events - such as a new chair of trustees joining, a particularly bad experience with the sponsor in negotiating a valuation or a significant changes to the pension scheme e.g. closing to accrual.

I’ve also seen reviews driven by the pension trustee board wanting to achieve better clarity around roles and responsibilities of the key parties. This can lead to introducing an improved governance framework, better working relationships and improved delegation leading to more effective working.

Whatever the reasons for reviewing pension trustee performance, it is clear there are so many different ways of doing it. Knowing what other schemes are doing can be really beneficial, so we’ve teamed up with Professional Pensions to find out what trustee boards are doing. If you’re a trustee, scheme secretary or pensions manager you can take part in the research here: https://www.surveygizmo.com/s3/5024696/f0035d5d9785.

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