The Pensions Regulator

New requirements for trustee knowledge and understanding now effective

Ref: PN09-19
8 December 2009

The Pensions Regulator's revised Trustee Knowledge and Understanding (TKU) code of practice is now in effect. The code sets minimum requirements for trustees to help ensure pension schemes are run effectively.

Following consultation, the regulator found widespread support for the TKU regime, demonstrating how it has become embedded in trustee activities since implementation in 2006. Most respondents acknowledged the positive change it has made to the way trustees approach their responsibilities.

The learning requirements, set out in the code, which have been in force for over two years have been updated, and the key changes are:

• in order to know the essential elements of the scheme's trust documentation, trustees will be required to read it all thoroughly;
• it is more explicit that the regulator expects trustees to use the Trustee toolkit unless they can find an alternative learning programme.

The guidance supporting the code has also been subject to a review. The most significant change is that there is a reduced requirement on trustees of small (12-99 members) fully insured DC schemes.

Pensions Regulator chief executive Tony Hobman said:

“The responses we received to the consultation were very positive and we welcome the increased confidence with which trustees now approach their responsibilities.

“We know that the code has worked for trustees and we are building on this progress to enable them to continue to maintain and improve their knowledge and understanding.

“We will continue to encourage trustees to complete the Trustee toolkit modules that are appropriate for their scheme and to seek appropriate additional training wherever they see fit.”

You can view and download the revised code of practice from our governance campaign page.

Editor's notes

1. The revised code of practice is now in force. The initial code of practice came into force on 31 May 2006.
2. Under the Pensions Act 2004 (sections 247-249) and the (Northern Ireland) Order 2005 (Articles 224-226), pension scheme trustees must:
   • Have knowledge and understanding of pensions and trust law;
   • Have knowledge and understanding of investment and funding principles; and
   • Be conversant with documents relating to their pension scheme.
3. The Trustee toolkit is a free, e-learning programme developed by the Pensions Regulator, covering the whole scope of the trustee knowledge and understanding regime.
4. Codes of practice are not statements of the law. However they do have evidential value, meaning they will be taken into account by the Pensions Regulator Determinations Panel, a court or tribunal where relevant.
5. The Pensions Regulator is the regulator of work-based pension schemes in the UK, with objectives to protect members' benefits, promote good administration and reduce the risk of calls on the Pension Protection Fund. Our approach is risk-based focusing on education and enablement, with enforcement where appropriate. We have the ability to:
   • collect information about pension schemes; through scheme returns, under the scheme funding regime and as well as statutory (including whistleblowing) reports;
   • issue notices requiring actions to tackle non-compliance, prohibit trustees who are judged not fit and proper to carry out their duties or appoint independent trustees;
   • direct pension schemes as to how to calculate their liabilities and the contributions required;
   • issue a contribution notice where there is an attempt to avoid liabilities, or a financial support direction where the employer is a service company or insufficiently resourced.