The Pensions Regulator (TPR), the UK’s watchdog for workplace pensions, has removed the trustees of Northern Ireland retailer Dunnes Stores’ defined contribution plan, and replaced them with an independent trustee following a slew of governance failures.
TPR said the move was made to protect the participants of the Dunnes Stores (Bangor) Limited Management Pension Scheme. TPR said “the acting trustees were found to lack the knowledge and understanding” to govern the plan properly, and that it was concerned the “trustees’ failure to grasp their responsibilities” was putting the benefits of the plans 390 members at risk.
The regulator said it was the first time it has used its power to appoint a trustee primarily because of a lack of competence of the existing trustee board. It did not name who the new trustee is.
“The trustees put member outcomes at risk and so we took action to ensure benefits are protected,” Nicola Parish, TPR’s executive director of frontline regulation, said in a release. “The trustees have been replaced because they have consistently failed to show they had the skill to do the job properly.”
After TPR launched an investigation into a series of governance issues, the case was referred to the regulator’s Determinations Panel. TPR said the employer-nominated trustees had failed to engage properly with the watchdog, and consistently failed to address several governance concerns, despite assurances that they would.
The Determinations Panel found that despite more than a decade of being responsible for running the plan, the trustees had failed to familiarize themselves with the requirements of UK pension legislation. The trustees showed “that they do not have, or are not exercising, their knowledge and understanding for the proper administration of the scheme,” the panel said.
According to the panel, the plan had two trustees: John Nugent and Brian Daly, both of whom were appointed in 2006 as employer-nominated trustees.
In 2015, the trustees informed TPR that they had not complied with the Occupational Pension Schemes (Charges and Governance) Regulations, which impose a charge cap of 0.75% annually, based on a members’ default arrangement fund value in a pension plan used for auto-enrollment.
Between September 2015 and October 2016, TPR’s Regulatory Transactions Team attempted unsuccessfully to engage with Nugent and Daly to understand the extent of the breach of law, member detriment, and what actions were being taken to rectify the problem. Later in October 2016, the matter was passed to the TRP case team due to the trustees’ failure to respond to enquiries.
“This failure gave rise to concerns regarding the Trustees’ abilities,” said TPR.
In a January 2017 conference call between the trustees and the case team, the trustees were unable to confirm why the charge control breach had occurred or how it was going to be resolved. TPR said that during the call, the trustees indicated that they were not sure what was required of them under UK legislation. The case team said it explained to the trustees that it is their responsibility to ensure the fund is compliant, and that it is not the obligation of the fund provider as they had presumed.
The independent trustee of the plan is currently considering the future of the plan as to the best way to protect member benefits, said TPR.
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Tags: Defined Contribution, Dunnes Stores, Pension, The Pensions Regulator