The Pensions Regulator

Code of practice 07
Trustee knowledge and understanding (TKU)

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Demonstrating knowledge and understanding

53. Trustees may have difficulty in feeling confident that they have met the requirements for the necessary knowledge and understanding, and may wish to assure themselves and their fellow trustees that they have done whatever is required to acquire it. Furthermore, sponsoring employers may take an interest and members may well do so as well, especially if they have some problem with the scheme or, conversely, if they might consider standing as a trustee.
54. It is good practice for trustees to keep records of what they do individually. In addition, trustee boards should keep records of the individual learning activities of members and records of learning activities carried out by the board as a whole. However, the task should not be onerous because any good learning programme will maintain records of the learning activities of individuals on the programme or of group activities if these have taken place. Trustee boards may like to consider whether they should additionally keep records themselves of any further learning activity (e.g. reading, attending conferences, sessions with the scheme advisers etc) although such record keeping is not mandatory. Neither is it intended to be onerous or difficult. A simple log would suffice.
55. Some large schemes already have installed a system of annual discussions between the chair of the board and individual trustees about the progress of those trustees and whether there are any learning activities which might be useful for them in the coming months.
56. Trustees may then like to consider whether and how they might communicate with employers and members about what they have done.
57. Records by themselves cannot of course wholly demonstrate that trustees have the knowledge and understanding appropriate to their roles. This is more likely to be effectively demonstrated in the trustee board meetings, especially where advice has to be considered and decisions have to be taken.
58. For example, in a DB scheme, where an actuarial valuation is being undertaken, the trustees should be using their understanding of the actuarial assumptions used in those calculations. They should:
    • know what the assumptions are which have been used;
    • understand that these assumptions have a marked effect on the final valuation;
    • satisfy themselves that the assumptions are sensible in their circumstances; and
    • be able to take these considerations into account when considering a contribution level to agree with the employer.
59. The minutes of such a meeting will record the elements of the discussion which will show that trustees have fully entered into the decision making process.
60. Certification of the successful completion of a learning programme is likely to involve the completion of self assessment assignments. In this case, provided that the question regime is robust and credible, it will genuinely testify to success in relation to the learning programme.
61. There are many trustees who will want to receive recognition in this way for their own satisfaction and for the purpose of demonstrating to others what they have done. They should satisfy themselves that any chosen learning programme will be able to meet this requirement.
62. Other trustees will want to take a qualification, as they have done in the past. A qualification is offered for this purpose and it will be accredited as a vocational qualification so that those trustees who want to make it part of their lifelong learning credits are able to do so. There is no requirement in law to take a qualification and there will certainly be no pressure from the regulator to do so. It is simply offered for the benefit of those who wish to avail themselves of the opportunity.
63. The Financial Sector Skills Council (FSSC) and the Qualification and Curriculum Authority (QCA) have approved a syllabus for such a non-mandatory accredited vocational qualification within the National Framework of Vocational Qualifications. This syllabus will be published on the regulator's website which will also carry details of the current provider(s) and will provide a web link. It is for the QCA to determine who may provide qualifications, and it has already authorised the PMI to do so.
64. Readers of this code may find that this syllabus is an extremely useful further guide as to the depth of the knowledge or understanding expected for different elements of the Scope Guidance, whether or not they are contemplating taking the qualification.
65. Professional trustees and those who offer their services to schemes on the basis of specific expertise should be able to demonstrate to the employer sponsor and to their fellow trustees that they are appropriately qualified to do so from the date of appointment. Experience will clearly be required and it is likely that a formal qualification will be expected. Many such expert trustees will already hold one but the expectation will be the same, whether or not they are remunerated by the scheme. Similarly, trustees to schemes in wind-up should also be able to give assurances on these points.

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