The term ‘governance’ can mean different things to different trustees and it is not always easy to pin down exactly what needs to be done.
To assist trustees in reviewing governance, it can be broken down into six key aspects. Under each of these headings, there are a series of issues for trustees to consider such as:
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Board members need to consider whether the board as a whole has clear objectives and whether conflicts of interest are managed effectively.
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As well as considering compliance with Key Performance Indicators (KPIs) trustees must establish whether the KPIs are effective. For example, KPIs should cover accuracy as well as the time taken for specified activities.
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In the current environment, this is likely to focus on the strength of the covenant, but other aspects of the relationship such as conflicts of interest should not be ignored.
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Trustees need not only to identify the key risks faced by the scheme, but also prioritise them and establish an action plan which should be subject to regular testing and reviewed on an ongoing basis.
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Under this heading, trustees need to consider the Trustee Knowledge and Understanding requirement. It is also important to remember that compliance with legislation does extend to the trust deed and rules.
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The trustee board needs to consider all aspects of communication which includes that with the members, the employer and the flow of relevant information to the trustees themselves to enable them to operate the scheme.
How we can help?
Baker Tilly have developed a facilitated governance review which will
assist you to consider these areas in detail and help you build an action
plan which should in turn lead to the scheme operating more efficiently
and manage risk better.