Succession planning has long been a critical part in managing a business through the transition of key individuals either because they decide to move on, or due to retirement.

Succession planning is equally critical for managing pension schemes, and is becoming even more difficult as it is becoming harder and harder to find members of the scheme or employees within the sponsoring company who are willing and have the right skills to manage a complex financial structure such as a pension scheme.

We think there are three key steps in ensuring that new people are brought in with the right skills and at the right time so that schemes can continue to be run with the same level of good governance, and without disruption so that planned activity can continue seamlessly.

• The Trustee Board need to understand where the gaps are in knowledge and experience and which new gaps are likely to emerge if members of the current Trustee Board intend to retire. Be open and honest amongst the Trustee Board if retirement is on the horizon. It’s not just a numbers game, it is really important that the skills and experience around the table reflects the journey that the pension scheme is planning to go on over the next few years.
• Allow plenty of time to find the right person to fill the void. There should be a good overlap of time where a robust transition can take place, potentially with the new trustee and the retiring trustee spending some time together to share the nuances of the situation. The Trustee Board should be introduced to potential new candidates so that they get comfortable that they can work well together for the next few years, and that the board are convinced that the new individual really does add value. Clearly, whether a selection or election process is run to find a replacement trustee, ample time needs to be allowed so that this process is thorough.
• If specific knowledge and experience is being sought from the new trustee, the Trustee Board and the sponsor should spend some time talking to individuals and testing their initial thoughts on various aspects of running the pension scheme in advance of appointing them as trustee. Having a diverse set of views so that appropriate challenge and discussion can be had is important, but it is also important that the underlying philosophies of the new appointee and the other stakeholders are not so far apart that nothing will get done to improve the position of the pension scheme and its members.

We have spoken to many pension schemes around succession planning, and there is a common acceptance that a professional trustee can help to fill in the gaps of knowledge and experience that the rest of the board are unable to access through a new member nominated or company nominated trustee. However, all of the above points are equally applicable to selecting the right professional trustee in terms of their background and experience, their ability to work with the rest of the board and the sponsor and their commitment to spending time with key stakeholders to get the transition right.