A test of trusteeship

Back in 2016, The Pensions Regulator published a discussion paper on 21st Century Trusteeship and governance. This considered how to raise standards among trustees and improve the way that pension schemes are managed.

When the opportunity came to take the Pensions Management Institute (PMI) Level 3 Certificate in Pension Trusteeship Unit 2 – Soft Skills exam (regulated by Ofqual) in 2019, I looked at it as part of a continuation of the need to raise standards and thought I knew what to expect. When I found out there was a soft skills test, I wondered what this would mean and what would be tested. There are so many soft skills trustees use on a daily basis.

Trustees need to be organised, trustworthy, acting at all times with honesty and integrity. They need the ability to think independently, such that they are not easily influenced by others as they listen to alternative opinions, after which they make up their own mind how best to exercise judgement.

No soft touch

I discovered that the soft skills exam tested all this and more. It dealt with the many scenarios that may arise in the role of a pension scheme trustee. It considered the challenges around good governance, managing conflicts of interest, the need for training and improving knowledge. The test also included the ability to lead and manage advisers, service providers as well as others.

Trustees must act in the best interest of all members and show transparency in how they behave in the role. This creates trust and illustrates that they understand their “real boss” is the membership.

Working with co-trustees

When trustees seek to be compliant in their individual capacity with the considerable legislative requirements, they must always be aware that they form part of a board of trustees which will be key to the long-term success of the pension scheme.

The board of trustees sets the strategy, but relies on individual skills and experience to work together and plan ahead. Trustees must also be aware of potential conflicts of interest, that are not always possible to avoid, in which case there is a need for full disclosure. 

Another area of soft skills tested is that of good active communication with the members, to ensure trustees continue to be meticulous stewards.

Time for reflection

For me, one of the main benefits of taking the soft skills test was that it made me take a step back and reflect. It reminded me that trustee boards need to be trained in complex decision making, often under stressful conditions, and that even after taking expert third party advice, the decision always remains that of the trustee.

I saw it as an essential part of my ongoing training. Some of the soft skills scenarios require deep thought and illustrate that, sometimes, there are no perfect answers, particularly when trustees manage conflicting priorities. This forces us to explore the options and exercise judgement with the often limited resources available at the time, to ensure we seek a balance amongst the various stakeholders.