River and Mercantile: Trustee education more important than formal qualifications
Providers should focus on offering more support and education to pension schemes in 2018, with this form of assistance currently more important than the creation of a formal trustee qualification, according to River and Mercantile’s Mark Davies.
Davies, managing director of River and Mercantile Derivatives, said education should be top of the agenda in order to ensure trustees are in a position to navigate the myriad challenges faced by schemes and ultimately their members.
Commenting in the wake of River and Mercantile’s inaugural Small Schemes’ Summit held in late 2017, Davies said: “Trustee education is absolutely pivotal but I think the asset management industry has been historically bad at providing it. Getting better at supporting trustees in this way – something we take incredibly seriously – should be a key priority for providers this year and beyond.”
During the Small Schemes’ Summit it was revealed that there was support among trustees for the introduction of a formal qualification. According to a recent survey of its members, the Association of Member Nominated Trustees (AMNT) found 55% were in favour of a compulsory trustee qualification.
While current legislation requires trustees to have knowledge and understanding of the law relating to pensions and trusts, as well as the principles relating to the funding of schemes, there is no requirement for any formal qualification process.
Davies said that while the findings showed that there was appetite to formalise a role that is currently unpaid for the majority of trustees, he did not believe it should be a priority in the short term.
“With markets so changed from previous eras, the challenges facing small schemes are now very different, and it is understandable that many feel that the process of being a trustee should be professionalised.
“However, at this moment in time we believe it is more important that the industry gets better at providing and supporting education than trustees obtaining some kind of formal qualification.”
While a formal qualification may not be the most pressing issue facing trustees, Davies added that “trustees also had concerns about both the complexity of the decisions facing them, as well as facing the challenge of ensuring they meet regulatory standards.”
“During the summit the Pensions Regulator reiterated that trustees needed to ensure they knew what they were doing, and this chimes with what we have been saying for some time; trustees need support from asset managers to ensure they are in a position to manage schemes effectively,” Davies said.
“Complexity was also raised as a problem but our view is that the perception of complexity is a by-product of poor education, so for us this just reinforces the view that of the key area for providers to focus on this year.”