Analyzing Trustee Governance in UK Private Pension Schemes - Finance

This report delves into the governance of trustees within private pension schemes in the UK, examining their roles, responsibilities, and the challenges they face. It references the Pension Regulator (TPR) and its efforts to improve trustee standards. The research identifies gaps between regulated practices and academic theory, highlighting the importance of balancing practical solutions with conceptual understanding. The report outlines the research objectives, including identifying reasons for trustee reluctance in implementing governance practices and assessing the sufficiency of TPR expectations. It poses key research questions related to trustee responsibilities, neglected practices, and potential improvements. The methodology involves a mixed-methods approach, combining quantitative content analysis with qualitative data collected through questionnaires from trustees. The research aims to contribute to the understanding of sustainable development in accounting and address the evolving needs of the UK pension system. Desklib provides access to similar assignments and study tools.

Running head: PENSION IN THE UK
Pension in the UK
Name of the Student
Name of the University
Author Note

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The role of the Governance of Trustees in the Private pension Schemes in UK
Introduction
The term governance can be defined as a set of practices that attempt to specific
performance of work in order to enhance the efficiency as well as transparency in administration
along with disclosure in corporations, nonprofit as well as public organizations, investment funds
and others. One of the major funds includes the pension schemes that includes systems for
managing the investment decisions and pensions. The investment decisions are related to highly
clear as well as straightforward criteria (Black, 2003). This fund is crucial since majority of the
pension decisions extended to long term for employees and investment decision secure their
financial stability.
The pension system in UK was established in the year 1908. The pension system has
been revised by the government several time for betterment o that the system can meet the
beneficiary requirements like reviewing the Pension Schemes Act 1993 and 1995. He pension
age of the professionals were also raised for keeping accordance with the increased life
expectancy of the citizens. The pension system in UK can be segregated into several types that
include state pension, individual pension as well as state pension. In this study, the research has
focused chiefly on occupation pensions (private schemes). This pension helped the employers as
well as the employees to make decisions associated with managing and investing their funds
through third parties. This proposal also assesses the role of the governance trusties when it
comes to occupational pension schemes in UK.
Background

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TPR can be defined as a public body that regulates the occupational pension schemes in
order to build the confidence of the pension earners (TPR, 2018). TPR provides consultation to
the scheme parties like the employers, employees, business advisers and trustees by providing
them ideas of how they should proceed through toolkit, bulletin, websites and others. In the year
2016, TPR decided to raise the standard among trusties in order to enhance their capability of
managing as well as developing pension schemes. This was followed by launching of a program
that includes three practical steps as followed:
 Set roles, responsibilities and objectives
 Recruit effective and skilled chair and board
 Focus on the outcome, close relationship among parties along with managing risks.
In the year 2027, TRP stated that,
““Recent research by TPR has shown that while some trustees are doing a good job, many
trustee boards, particularly in small and medium schemes, have failed to act on TPR’s codes and
guidance to meet standards of good governance.” (Ref: PN17-56, 2017)
"We also carried out research showing that many pension schemes are not meeting the
governance standards we expect."( 21st Century Trusteeship, 2017)
Research Gap
 The issue that arises from regulated as well as professional view
Considering the fact that the research iis completely based on the result of the discussion and
research of TPR, it lack government standards in several schemes. However, since TPR has

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provided practical solutions in order to enhance the governance as well as occupational schemes,
this can be considered as a highly helpful work.
 The issue from academic view
The issue is related directly to the government theory along with other concepts and theories
like the agency theory, trusteeship, independence, investment; protect intergeneration equity,
confidence as well as others. Thus it can be said that the academic solution lacks practicality. It
is more comprehensive as well as integrated. It provides new horizons as well as creative ideas.
Along with this, in professional researches, trusties is defined as the scheme which is
managed separately by anyone for instance, an employer. A trustee can also include an
individual or even an organization. This while in professional research, the researcher attempts to
find a practical solution for the specific or internal issue, in academic research, the researcher
attempts to answer the question conceptually in order to contribute to the knowledge building as
well as to serve others researches in future.
Moreover, it should be understood that there prevail no perfect system that does not have
flaws. Hence it is crucial to focus on the solution. The pension system of Britain reflects that due
to the developments, specifically in the year 1990s, are consequent that indicate continued
auditing as well as concern for beneficiaries. Thus the UK pension system encourage research
for several reasons that includes:
 It has prolonged experiences that contain several challenges as well as developments.
 There prevail several official databases for documenting the statistics as well as the data.

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Therefore, studying as well as analyzing the issue in such environment possesses the
potential of the researcher to explore the relationship between the trusteeship as well as
governance in pension schemes. It is not easy to measure the accountability of this relationship
or evaluate oit as it is not a quantity relationship. So it is crucial to enhance continuously in order
to meet the need in economic, financial as well as in social fields.
Objective of the research
The chief aim of the study is to assess the role of the governed of trustees when it comes t the
pension fund from an academic perspective. The chief objectives of the research are as follows:
1. To identify the trustees’ percentage who fail to perform their duties government practices
or responsibilities since they did not understand the role in pension schemes
2. To identify the characteristics of the trustee’s governances when the pension scheme’s
sizes are different.
3. To assess the reasons behind the reluctance of the trustees when it come to
implementation of some governance practices in pension schemes
4. To identify the methods for motivating the pension scheme trusties so that they aply
governance.
5. To analyze the sufficiency of the expectations of the TRP from the governance checklists
of the trusties
6. To identify the implications of the UK pension schemes.
Research questions
1. What are the responsibilities, governance practices or duties that trustees fails to perform
due to lack of their understanding of their role in pension schemes?

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2. What are the governance practices that are majorly neglected by the trustees to apply?
3. What are the most crucial governance practices too be applied?
4. What are the most crucial reasons for trusties to apply some governance practices?
5. What suggestions should be provided to the trustees in order to enhance their compliment
when it comes to applying governance application?
6. Does the diminishing number of trustees result in decreased governance in the pension
schemes?
Why the topic has been chosen?
 This research for Accounting :
The research attempts to explore the relationship between trusteeship as well as government
by examining the trustee’s governance in pension schemes. It helps the trusties to rationalize
investment decisions along with protecting the rights of generation. Thus, this research is
expected to help future researchers to build the knowledge of sustainable development.
Accounting science and contribute to building comprehensive theory in it.
 This research In Accounting :
It is not easy to set governance standards for pension scheme since it is not a stable quantity.
Hence it requires a considerable amount of time for assessment as well as for review. In
developed countries it is possible since most of the efforts are coordinated among relevant bodies
as well as bodies in the official databases from the beginning like officer of National statistics as
well s capital IQ in UK. However developing countries like Saudi Arabia needs more time since
their experiment is still new.
Literature Review

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1. Chief weaknesses/strengths of governance in current pension fund
Need more study
2. Pension Fund Management using good governance
According to Stewart and Yermo (2008), good government possess several positive side
impacts like development of trust among the stakeholders, diminishing the requirement of
prescriptive regulation as well as facilitating supervision. Effective pension fund governance
can be more effective than the corporative governance of the organizations in which they
invest in. This is because, well managed pension funds are more likely to seek value for their
investments via a more active shareholder policy.
3. Role of trustees in context to pension plan governance:
Josiah et al.,2014 stated that trustees plays a major role in providing a better quality as
well as trust based pensions in order to protect the benefits of the member. Trustees in trust
based pensions as well a in defined benefits assure effective scheme governance. The powers
as well as duties of the trusties have been defined bellow.
 To perform keeping accordance with the trust deeds or rules. The trust rules and the
pension legislation provide authority to the trustees to work accordingly.
 To act with responsibility as well as prudence: In UK, the trustees exercise their
authority and consider circumstances impartially to gain profit from pension scheme
(Randle & Rudolph, 2014).
 To perform for the interest of the beneficiaries: The trustees work keeping accordance to
the interest of pension scheme beneficiaries.

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 To act in an impartial way: The trustees weigh various interests of several members
against each other. They must also demonstrate a fair way between individual
beneficiaries.
According to Phan & Hegde, (2013), the chief role of trustees is to act keeping accordance to
the interest of the beneficiaries who are generally the members of the scheme. Thy posses the
duty in delivering the purpose of trust that includes duty of care along with the fiduciary duty.
4. Trust-based pension systems to strengthen pension fund governance
Methodology:
8.0 Research Methodology
8.1 Research Design
A mixed method design will be used in order to meet the aims and objectives of this
research. This method will be used to the role of the governance trustees when it comes to thee
pension schemes in UK. A mixed method designed refers to the gathering a well as accessing of
both qualitative as well as quantitative data in orer to obtain the result. In this research desgn,
data are gathered simultaneously keeping accordance to he priority and is comprised of the
combination of data (Morse and Cheek, 2014).
Within this designed both qualitative as well as quantitative approaches hav been
combined and the result from any oof the method will be used to further illustrate the result . this
process Is followed in order to support as well as enhance the other method. Several researceers
stated that the combination of the two methods possess the capability to reform result along with
extending inquiry range by using diverse approach for different components of inquiry.

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In this research, the rationale for using the mixed-method design is "complementarily." In
this, the results from the qualitative method will be used in order to assess the results from the
quantitative method.
8.2. Research Hypothesis
The hypothesis of the research includes:
H1: The diminishing number of trustees in the pension fund is resulting in decrement in the level
of governance
H2: The checklist of government trustees’ role when it comes to occupational schemes is
sufficient.
8.3 Research Population

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The research will be conducted on occupational schemes as well as defined contributed
schemes in the private UK private sectors. The total number of schemes is 28 schemes, 14 of
which will be recommended by TRP and another 14 chosen randomly.
8.5 Quantitative Data Collection
The researcher will perform a content analysis the financial and statistical results under
study.
8.6 Qualitative Data Collection
For qualitative data collection a questionnaire will be developed and sent to the trustees.
This questionnaire will be designed in order to retrieve data as well as information from the
governance of pension schemes. Open ended as well as probing questions will be used in the
questionnaires. This questionnaire will also include questions associated with the person along
with his or her demographic characteristics.
8.7 Data Analysis
The research will include both quantitative as well as qualitative data, and hence the
analysis of data will also be carried out both quantitatively and qualitatively.
8.7.1 Quantitative Data Analysis
In the research, the researcher will use the descriptive content analysis to ascertain as
well as describe the characteristics of the schemes with the help of calculating measures of
central tendency like mean and median along with the dispersion around the mean. The research
analysis will be performed in order establish differences when it comes to test variables between
several varieties of schemes so that the strength of correlation can be established between them.

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8.7.2 Qualitative Data Analysis
In order to analyze the interviews the following steps will be followed:
1. Transcription of questionnaire data.
2. Description of the background of the respondents.
3. Coding process that involves:
 Generating initial themes.
 Coding data according to the initial themes.
 Improvement of key themes based on research questions.
 Coding data keeping accordance to the key themes.
4. Interpreting themes
5. The theme interpretation integrates with the findings of quantitative data
6. Assessing the challenges during implement the governance standards.
8.8 Overall Research Steps
In order to achieve the research objective the following steps will be followed:
1) Reviewing as well as reading variously related literature associated with the application
and adoption of the IAS 19 as well as IAS 26.
2) Comparing the financial statement of listed organizations with the disclosure of IAS26
along with the presentation requirements
3) Developing as well as testing the research instruments.
4) Ensuring the validity as well as the reliability of instruments.
5) Identifying the relevant occupational schemes.

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6) Retrieving the necessary permission from the governmental as well as the non-
governmental bodies in order to conduct the study.
7) Collecting the required data using the research instruments.
8) Analyzing the data collected as well as explaining them.
9) Discussing the results in the light of the research questions as well as comparing them to
similar results.
10) Writing up the research.
11) Submitting the first draft of the research document.
12) Making as well as conducting required amendments provided by the supervisor.
13) Submitting the final draft.
9.0. Research Limitations
There prevail a few limitations of this research. For instance, few difficulties may arise
during collecting information from pension scheme regulators as well as trustees of the
companies operating in UK since some of them possess the potential to provide biased answers.
Along with this, few trustees may also feel uncomfortable to answer the questions asked.
Along with this, the methodology depends on the official websites as well as bulletins
that include TRP, Office for National Statistics as well as others. Also the database called Capital
IQ possesses limited access.
10.0. Ethical considerations

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The researchers should take ethical considerations into account while conducting the
study. The consents of the participants will be taken before conducting the interviews.
Confidentiality will be maintained. The interview will be recorded only after gaining their
consent.
11.0 Conclusion
The UK regulators are setting standards of pension scheme governance. They are
considering good governance as a crucial condition for securing benefits for members. In 2017
according to the TPR, the governance level of several schemes does not reach upto TPR
expectations. The government is attempting to solve this issue by several practical solutions like
clarifying the requirements by issuing several bulletins as well as training materials.
Investigating this issue from an academic perspective may help the researchers to find the
solutions. The findings may contribute to knowledge building. This proposed research will
chiefly focus on assessing the role of the governances of trustees when it comes to occupational
pension schemes.

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References:
Blake, D., 2003. The UK pension system: Key issues. Pensions: An International Journal, 8(4),
330-375.
Buach Library (2018)https://belmont.libguides.com/c.php?g=65860&p=424912
GOV (2014) https://www.gov.uk/guidance/pension-trustees-appointment-and-role#who-can-be-
a-trustee
https://www.gov.uk/browse/working
TPR (2017) 21st Century Trusteeship – Three-month round-up
TPR (2018) https://www.thepensionsregulator.gov.uk/en/about-us/what-tpr-does-and-who-we-
are