The role of independent trustees is an important one, even more so given the pension reforms which the government is currently proposing. From 2012, all UK employers will have to automatically enrol their employees into a pension scheme, whether it’s the employer’s current pension scheme or a completely new one.

Under the reforms, employers will also be required to make contributions on behalf of their workers, communicate certain information to employees, and register their pension scheme with the Pensions Regulator. Whilst the impact predominately falls on the shoulders of employers, independent trustees will also have to keep abreast of the changes.

At the very least, they should check with the employer to find out if the company’s current pension scheme is to be used for automatic enrolment when the reforms kick in. If it is then the independent trustee should try to ascertain whether the changes are likely to affect the company pension scheme’s current membership.
The Pensions Regulator has produced a five-step action check list for trustees, step one of which advises trustees to know when they have to act. The start of automatic enrolment, says the Pensions Regulator, is being staggered across a period of 4 years, according to company size, with the date from which new duties apply to each company known as the staging date.

“The staging date is based on the number of people in the company’s largest PAYE scheme. The employer should be willing to share their staging date information with you,” says the Pensions Regulator.

Step two suggests both employer and trustee should work together to asses whether the company’s existing scheme meets the qualifying criteria for existing active members, and to confirm whether it could be used for automatic enrolment of new members. The third step calls for trustees to consider the impact of changes on the current pension scheme.

In step four, the check list says trustees should consider mobilising an implementation team. If appropriate, a sub-committee should be formed which would be responsible for automatic enrolment. Trustees should understand the key legal requirements and time frames and assess the impact on systems, processes and interfaces. They should also engage with their pension advisers at the earliest opportunity.

The fifth step involves communication with pension scheme members in order to keep them informed about how any changes will affect them and when these changes will occur.

The proposed reforms only serve to highlight the importance of the role of independent trustees, a demanding one at the best of times. The role has always required a degree of knowledge and understanding.

The Pensions Regulator says, “Committed and conscientious trustees play an essential role in the proper running of pension schemes. Our aim is to provide you with support and guidance to carry out your role with confidence. Your duties are wide-ranging – from the collection of contributions to the investment of assets and payment of benefits. The scheme members look to you to make sure that their pension benefits are secure.”