Reflecting on a trustee effectiveness review

Trustee board awareness leads to better decision making, resulting in better member outcomes.

Following the 2021 consultation on The Pensions Regulator’s new Code of Practice, trustee effectiveness is now high on the agenda for most trustee boards. It is therefore timely for us to share the experience of one set of trustees who we supported in carrying out a trustee effectiveness review.

What we did

We explained to the trustees that many factors affect the operation of an effective board, including: 

• experience and expertise
• social diversity and the ability to consider a variety of perspectives
• the ability to make informed decisions
• effective challenges 
• an inclusive approach to decision making

The first step of the review was to deliver trustee effectiveness training. This ensured that the trustees felt comfortable with the process, and understood the purpose and what they could gain from it. We then provided them with our online GAPS questionnaire to help draw out their views of what was Good, Adequate and Poor about the way their board operated. Our questions covered the areas that The Pensions Regulator specifies as being important to a well-run scheme. 

Collecting the views of the individual trustees was just the beginning of a useful and thought-provoking exercise. The real value came from interpreting the results and developing strategies for improvement. In addition to analysing the responses, we spoke separately to each trustee to gain a deeper understanding of the reasons for their answers. The trustees felt that this was particularly useful in order to gain insight and bring their thoughts to life. 

We then facilitated a workshop where the trustees considered the findings as a group, so they could agree a collective position. The outcome from the workshop was a clear action plan which took account of some ideas from the trustees for improvements, and some Suggestions using our own experience of how to achieve best practice scheme governance. The trustees also agreed to review their action plan at a later date to assess the impact of any changes made.

The result

The board concluded that they operated well together. However, they were also keen to adopt improvements, including the following:

• Training - we worked with each trustee to produce a tailored training plan in addition to a board training plan, all of which were aligned to the scheme’s business plan objectives. This means that the trustees are well-informed at the right time, resulting in more efficient decision making. 
• Delegation - we developed a strategy for strengthening the board’s understanding of governance responsibilities. This resulted in a more streamlined approach to identifying issues that require the full board, and those which can be delegated to a sub-committee. This enables the trustees to make the best use of their limited time at meetings to focus on matters of key strategic importance. 

Looking ahead

The trustees found the exercise to be of such value that they have requested an annual review of their effectiveness in addition to their usual board meetings. This will allow time away from busy, routine board meetings to check whether they are operating effectively in an ever-changing pensions landscape. The trustees are now in a good position from which they can consider the wider aspects of the new Code of Practice.

Want to know more?

If you would like to speak to us about how we can support your trustee board in maximising its effectiveness, please contact our Pension Management experts Simon Maxwell, Mandie Bird or Kathryn Foster using the contact details below.