In August 2016 the Regulator issued three £2,000 fines
against an independent trustee company following their failure to
produce a signed chair's statement before the statutory
Since 6 April 2016 trustees of DC schemes trustees have been
under a requirement to ensure an annual chair's statement is
produced and signed.
Trustees are now being urged to pay attention to their
requirements, or, "face the consequences".
The consequences are a mandatory fine issued against the
What are trustees required to do?
The Code of Practice 13: "Governance and administration of
occupational trust based schemes providing money purchase
benefits" provides full detail about the requirements. The key
points to note are:
trustees are required to produce an
annual chair's statement regarding governance of the scheme
within 7 months following the end the scheme year;
in the statement, trustee boards must
describe and explain how they have met certain legislative
governance standards, as set out in regulation 23 of the
Occupational Pension Schemes (Scheme Administration) Regulations
a copy of the chair's statement
must be included within the scheme's annual report and
trustees must confirm within the
annual scheme return which they complete on the TPR Exchange site
that they have produced the chair's statement.
The statement must be signed by the
chair; if the statement cannot be signed by the chair because the
chair ceased to hold office less than three months before the
statement is signed, and there is no current chair, a deputy or
acting chair should instead sign the statement; and
The first chair's statement must
be produced relating to the scheme year ending on or after 6 July
2015. If the scheme year-end was within the three months following
6 April 2015, trustees are required to include reporting on the
period 6 April 2015 – 5 July 2015 within the statement for
the following year.
What needs to be included in the statement?
There is a prescriptive list of what needs to be included,
member borne costs and charges across
all arrangements within a scheme must be disclosed in the
trustee boards must explain their
assessment of value for members in relation to charges and
transaction costs in the annual chair's statement;
Some key quotes from the Code of Practice include:
"We expect the statement to be written in such a way as
to provide a meaningful narrative of how, and the extent to which,
the governance standards have been complied with. We expect trustee
boards to clearly set out the measures they have taken to achieve
compliance and the details of how they reached their conclusions on
the extent of compliance."
"We expect trustee boards to regularly discuss key
risks and issues, including topics on which they must report in the
annual chair's statement, and the extent to which the scheme is
meeting the standards set out in this code"
What happens if the Trustees fail?
mandatory fines apply where trustees
fail in their duty to produce the chair's statement within the
the fines range between £500
Nicola Parish, Executive Director for
Frontline Regulations at TPR has been quoted as saying "We
will act where trustees demonstrate that they are not complying
even with the basic duties we expect";
where an independent trustee is in
office TPR will take an even firmer stance, Nicola Parish has
stated that "Professional trustees are expected to meet a
higher standard of care and to demonstrate a greater level of
knowledge and understanding than other trustees";
trustees are under a duty to notify
TPR of breaches of law. In the recent case the independent trustee
notified TPR of its failure to produce the signed chair's
statements by the statutory deadline. Despite this, TPR issued the
maximum fine against the independent trustee as there were no
How is TPR helping trustees?
the Code of Practice provides clear
information in terms of the requirements;
TPR is sending reminders to trustees
In June 2015 TPR reminded trustees of
their legal obligations after issuing its first mandatory fine in
June 2016. That fine was for £500; and
On 16 August TPR issued a further
announcement following the issuance of three £2,000
TPR is sending news by email to
TPR has published an assessment
template which trustees can complete to assess whether they are
running a "quality DC scheme". TPR states that completing
the assessment template can assist with the completion of the
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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