The Pensions Regulator’s Andrew Warwick-Thompson briefs independent trustees on the findings from the trustee landscape research and the new DC Code

There is a vast disparity in scheme governance between DB and DC schemes, Andrew Warwick-Thompson, executive director for Regulatory Policy at the Pensions Regulator told an audience of independent trustees during Engaged Investor’s Professional Trustee Summit.

Andrew Warwick-Thompson

Despite the growth of defined contribution in recent years, bolstered by auto-enrolment, trustees of DC schemes were far less likely to know their duties and responsibilities, and less likely to scrutinise investment strategy.

Warwick-Thompson explained that ’DC only’ trustees were much worse at carrying out board meetings than their DB or hybrid counter parts. Only 36% held formal meetings every quarter (or more often) and a shocking 9% never hold board meetings at all.

Trustees in ‘DC only’ schemes were also least likely to meet the Trustee Knowledge and Understanding (TKU) standards: 25% of these schemes reported that none of their trustees met these standards or indicated that they were not aware of the TKU code. The average number of days spent per trustee each year on their duties was also lowest among this group (9 days), and half of ‘DC only’ schemes estimated that their trustees spent less than 5 days per year.

Looking at what makes for a good governance model, Warwick-Thompson suggested that trustee boards are not that different from executive or charity boards. He recommended that a good balance of experience and skills were crucial and that it was important that trustees wanted to be involved.

Engagement from trustees (particularly lay trustees) was likely to be harder for DC schemes due to a lack of engagement from members.

In an attempt to remedy this lack of governance in the DC space, The Pensions Regulator is carrying out a consultation on the new revised DC code.


The much shorter new code assumes trustees have a good level of knowledge of the relevant legislation, and articulates the standards of conduct and practice that trustees are expected to meet, however there are no plans to include information and guidance on how to meet the legal requirements in the code.

These details are expected to be delivered separately in a series of ’how to’ guides, which will be consulted on in April 2016.

The Regulator has also introduced more clarity in terms of the language it uses replacing confusing terms such as ‘should’ ’could’ and ‘must’ with the more understandable ‘the regulator expects’.

The shift was welcomed by attendees of the event with one remarking afterwards: “this is much better, it was too confusing before. Trustees need to know what is a regulatory requirement and what is a nice to have.”

Warwick-Thompson said he expected the code and guidance to be fully implemented by July next year.

For any trustees who may be worried about what to do between now and when the new code comes into force, Warwick-Thompson advised that everyone should continue to follow the old code.

However advisers are suggesting that trustees start thinking about what it might mean for them in practice, as it seems unlikely that the code will change much as a result of the consultation.

Warwick-Thompson told the audience that the Regulator had been working closely with the FCA to ensure that both regulatory bodies were consistent on the concept of ‘value for members’ one of the six key areas of focus in the code.

This will appease many in the industry who have argued in the past that pensions should fall under one regulator to improve consistency.

Finally - taking a question from the floor, Warwick-Thompson confirmed that the TKU is being looked at - to ensure it is still fit for purpose.