1 - Training and data quality issues are being addressed, but are the risk challenges?

Training by third-party advisers, training via the online Trustee Toolkit and regular attendance at seminars are again the three leading ways in which trustees are complying with the Pensions Regulator's trustee knowledge and understanding requirements (see Table 40).

Table 40: All schemes - what training options do the trustees use to comply with TKU legislation?

What is the frequency of trustee meetings in a 12 month period?

Is administration performance reviewed at each trustee meeting?

If 'yes', does the administrator provide a stewardship report on the scheme?

Do the trustees have a specific administration sub-committee?

Supporting this training picture, eight out of ten schemes hold between three and six trustee meetings each year, with seven out of ten reviewing administration performance at each meeting.

Stewardship reports from administrators are required for each meeting by close to nine out of ten schemes, with a marked advance in this requirement compared to a year ago.

A quarter of schemes now have a specific administration sub-committee (up 5 points on last year).

Nine out of ten schemes regularly review their advisers, with investment managers subject to the highest incidence of reviews over the last five years, being reviewed by 86 per cent of schemes, followed by scheme administration providers and investment consultants (see Table 41).

Table 41: All schemes: do the trustees regularly review their scheme advisers?

Please state the last time your advisers were formally reviewed

Legal advisers and auditors have experienced the lowest rate of reviews over the last five years.

'Investment strategy', 'employer's ability to fund scheme' and 'non-compliance with legislation' are seen as the top three risks impacting on the management of schemes (see Table 42).

Table 42: All schemes: legislation requires trustees to implement adequate internal controls to identify and mitigate risks to their schemes. Which are the biggest risks impacting on the management of your schemes?

However, the ranking in the list of risks is noticeably different between defined benefit and defined contribution schemes. In the latter case, for instance, trustees rank 'contributions paid in line with schedule' and 'administration errors' higher than in the case of defined benefit schemes, where the 'employer's ability to fund the scheme' and 'non compliance with legislation' figure more strongly.

Mirroring this, the priority of mitigating factors and controls to address the risks faced by schemes is also different between defined benefit and defined contribution schemes. For defined benefit schemes, 'regular employer covenant reviews' are a top priority, whereas 'monitoring investment performance' is the top priority for defined contribution schemes. These responses highlight the difficult and different challenges for those trustees who are responsible for managing both types of schemes at one and the same time, with inevitably limited resources and restricted time availability (see Table 43).

Table 43: All schemes: what mitigating factors and controls do the trustees have in place to minimise risk?

The question must be asked: where trustees are increasingly responsible for two different types of scheme, are these being managed in an equally rigorous manner, or does one of the schemes, because of a more rigorous regulatory regime, take a higher priority in terms of agenda time and overall attention?

Close to seven out of ten schemes say they have undertaken a formal exercise to assess the quality of their data, as recommended by the Pensions Regulator (TPR) (see Table 44).

Table 44: All schemes: in light of TPR's guidance on record keeping, have trustees undertaken a formal exercise to assess the quality of scheme data?

If 'yes', who did you commission to do the work?

If 'no', please state when this exercise will commence?

Will trustees formally review their data quality on a regular basis?

If 'yes', over what period?

On the whole, this has been conducted by in-house teams and third-party administrators. Over two-thirds of schemes say they will review the quality of data annually or more often. Given TPR's latest statement on a tougher approach to poor record-keeping, it is clear that this is not a matter where schemes can expect a casual approach to data records being viewed as acceptable. Whilst schemes may have reviewed the quality of their data, it seems clear from TPR's recent statements that the outcomes are at present falling below expectations.

Where a review of records has not yet commenced, two-thirds of schemes say they will start such an exercise within the next year.

Scheme funding issues have prompted the greatest number of scheme communications with TPR over the last year with approaches by close to one in five schemes. In all probability, this is a considerable underestimate of the overall contact that will have taken place between schemes' actuarial advisers and TPR, particularly where schemes are in deficit or requests are being made to extend deficit recovery periods.

This year, there has been a marginal increase in the reporting of 'notifiable events' by schemes reporting to the Survey, balanced by a reduction in clearance references, the latter presumably being due to generally lower volumes of company acquisitions and sales due to present economic and financial conditions (see Table 45).

Table 45: All schemes: have the trustees/sponsoring employer communicated with TPR over the last 12 months with any of the following issues?