Trustee Knowledge and Understanding meaning

In this issue: TPR publishes new general code of practice Investment Pension benefits Daily and weekly news alerts Dates for your diary Trackers TPR publishes new general code of practice The Pensions Regulator (TPR) has now issued the long-awaited general code of practice, bringing together and updating ten of its existing codes into a single code made up of 51 shorter, topic-based modules. TPR says this new layout will help governing bodies to locate its expectations quickly and to confirm whether they are being met. The ten codes included cover reporting breaches of the law, early leavers, late payment of contributions, trustee knowledge and understanding, MNTs/MNDs, internal controls, dispute resolution—reasonable periods, DC governance, and public sector governance. The general code was released alongside TPR’s final response to its 2021 consultation on the general code. Following comments made to the consultation, TPR has made numerous minor changes and, in some instances, remodelled or retired certain modules. For the most...

This guide is aimed at trainees, newly qualified lawyers and others who are new to pensions law, and also offers a high-level overview for in-house lawyers who are not pensions experts. Good scheme governance is crucial as it helps ensure a pension scheme is administered effectively and in members’ best interests. Specifically: it gives trustees clear oversight of day-to-day operations, responsibilities and delegations, promoting consistent compliance with legal and regulatory requirements it supports better decision-making and improved value for members Good governance spans several areas, including: the duty to have an effective system of governance (including internal controls) risk management conflicts of interest working with advisers equality, diversity and inclusion (EDI) record-keeping Effective system of governance (including internal controls) Since 13 January 2019, trustees of occupational pension schemes must put in place and operate an effective system of governance (ESOG) that includes internal controls. That framework should be proportionate...

Save where exempt, pension scheme trustees—including directors of corporate trustees and, from 1 April 2015, members of the pension board of a public service pension scheme—have a statutory obligation to acquire and maintain an appropriate level of knowledge and understanding across specified pensions areas. This obligation is commonly abbreviated to TKU. The TKU framework The TKU duty is set out in: sections 247–249 of the Pensions Act 2004 (PeA 2004) the Occupational Pension Schemes (Trustees' Knowledge and Understanding) Regulations 2006, SI 2006/686 (the TKU Regs) The Pensions Regulator (TPR) has expanded on the duty in a range of guidance, including: the General Code of Practice guidance on scheme management skills for DC pensions trustee guidance entitled ‘Understanding your role’ Which trustees are subject to the TKU duty? Subject to the exemption outlined below, trustees of all occupational pension schemes are within the scope of the TKU duty...

When reaching decisions, trustees are expected, among other obligations, to: act in the best interests of scheme beneficiaries act for a proper purpose possess sufficient knowledge and understanding of pensions law consider all relevant factors and ignore those that are irrelevant In putting this principle into effect, trustees need to determine: what amounts to a relevant factor, and the extent to which the trustees can (or ought to) take that factor into account For further information on trustee duties, see Practice Note: Duties of pension trustees. These matters were considered by the High Court in Independent Trustee Services Ltd v Hope (the Ilford case), which explored the relevance of the Pension Protection Fund (PPF) in trustees’ decision-making. The Ilford case—the facts Independent Trustee Services Ltd was the sole corporate trustee of the Ilford pension scheme, a defined benefit occupational scheme sponsored by Ilford Ltd (Ilford). Ilford then went into administrative receivership,...