Poor behaviour
Failing to plan
The scheme does not have a business plan to manage activities. Items are brought to the trustees’ attention by the scheme’s advisers or when the trustees have to make decisions.
Urgent business dominates meeting agendas and the trustees are unable to make time for strategic discussions. The trustees do not prepare for an upcoming regulatory change and end up missing a legal duty. The Pensions Regulator issues a penalty for non-compliance.
Without clear long-term goals or interim objectives the board is failing to govern the scheme effectively. Failure to comply with basic legal duties can be a sign of broader governance problems.
Good behaviour
Keep a forward look
The trustees keep a 12-month forward look of key legal changes, required activities and events coming up for the scheme. The trustees consider the plan at each board meeting, evaluate progress and update the plan. It provides the trustees with a clear and reliable way of planning scheme business.
The business plan shows what to cover at each point in the scheme cycle as well as reactive issues such as regulatory change that may arise. The board organises training based on these key activities and scheme events. For example, they receive investment training so they are ready to review the investment strategy.
Think strategically
The board has an annual strategy meeting and the trustees consider the scheme’s business plan. Evaluating progress against the scheme’s goals, they review the short-term and medium-term objectives and agree how these will be monitored.
The trustees consider the priorities in the plan and decide to delegate certain items to the scheme’s administrator. This frees up the trustees’ time and enables the board to take more of a strategic, proactive approach.
If less time is available, trustees allocate time in trustee meetings to focus on strategic issues.
Collaborate with sponsoring employers
The trustees discuss long-term plans and objectives with the sponsoring employer. The sponsor considers the investment performance is not good enough with too much volatility for the company balance sheet. They want to reduce the level of investment risk.
The trustee board carries out a review and sets out options, considering the scheme’s long-term journey plan. Developing a collaborative relationship allows the trustees and sponsor to understand and work towards the long-term goals for the scheme.