TPR publishes Professional Trustee Description Policy

The Pensions Regulator has published its policy document setting out its description of a professional trustee, which includes examples to demonstrate how it will apply the policy in practice. 

8 September 2017

The Pensions Regulator (TPR) has published its policy document setting out its description of a professional trustee following the consultation launched in March 2017. TPR intends to use the revised description of professional trustee across its regulatory activities, including when considering whether to impose a monetary penalty and the amount of that penalty. 

TPR expects professional trustees to demonstrate a greater level of knowledge and meet a higher standard of care than lay trustees. As a consequence, if a professional trustee fails to comply with pensions legislation, TPR is likely to apply tougher enforcement action (e.g. higher penalties) than it would in the case of a lay trustee. TPR has previously considered professional trustees to be trustees who charge for their services as a trustee (above reclaiming expenses) or who hold themselves out to be experts in trustee matters. Some responses to TPR’s consultation on DC Compliance and Enforcement Policy were of the view that, given the increasing trend for paying trustees who do not provide commercial trustee services, the payment of remuneration should not necessarily determine whether or not a person was acting as a professional trustee. TPR then published a further consultation document, containing a revised professional trustee description in March 2017, which has now been finalised following the conclusion of the consultation.

Professional Trustee Description
TPR would normally consider a professional trustee to include any person (whether or not a company) who acts as a trustee of a scheme in the course of business of being a trustee. 

TPR considers a person to be acting in the course of business of being a trustee where they represent or promote themselves (to the trustees or employers of one or more unrelated schemes) as having expertise in trustee matters generally (i.e. not just in certain areas), whether for remuneration or otherwise.

TPR would not normally consider a remunerated trustee to be acting in the course of business of being a trustee if:

(a) they are (or have been):

  • a member of the scheme (or a scheme sponsored by an employer in the same corporate group – a related scheme); or
  • employed by (or a director of) a participating employer or an employer in the same corporate group; and 

(b) they do not act (or offer to act) as a trustee in relation to any unrelated scheme.

The new policy confirms TPR’s view that the payment of remuneration to a trustee should not of itself determine whether or not that trustee is acting in the capacity of a professional trustee, as this could discourage people from being a trustee where some remuneration was offered. Conversely, where an otherwise professional trustee acted pro bono (e.g. as trustee of a charity pension scheme) or received indirect benefits, the absence of remuneration should not cause that trustee not to be regarded as a professional trustee.

Where a trustee is regarded by TPR as being a professional trustee in respect of one scheme, TPR will consider them to be a professional trustee in respect of all the schemes of which they are a trustee. 

The policy document includes a number of helpful examples which should assist trustees in considering whether or not TPR is likely to consider a person to be a professional trustee.

Scheme Returns
Under the scheme return, trustees are required to notify TPR if any trustee of the scheme is a professional trustee. This is not conclusive however and TPR may consider a trustee to be a professional trustee (based on the facts) regardless of whether or not they are identified as such on the scheme return.

TPR’s revised policy is sensible in recognising that the payment of some remuneration to trustees is now more prevalent and that it should not necessarily cause a person to be regarded as a professional trustee. The inclusion of examples to illustrate the application of the new policy in practice is also to be welcomed.