Schemes may have sub-committee meetings between main board meetings. Having sub-committees enables the board to focus more on strategic issues at full meetings. This can help to make the most of the time available.
Trustee sub-committees can also be set up for a number of other reasons. For example, they allow individual trustees the chance to spend more time on areas in which they are more interested or more experienced.
Common types of sub-committees include investment, governance, administration and audit.
A sub-committee will need its own records – for example it will need its own minutes and action log. As a consequence it will need a secretary. It may also be helpful for sub-committees to provide an update for the board to review at full board meetings, but this should be a summary only and not a duplication of the sub-committee’s discussions.
Sub-committees can be tasked with making recommendations to a board or may have delegated powers to make some decisions themselves. Although the sub-committee may make some decisions, all trustees are ultimately responsible for the decision.
Sometimes a sub-committee is set up on an ad hoc basis to make a particular decision, rather than the whole board being involved. This might be appropriate, for example, where there is a conflict of interest in relation to a particular decision. It can also speed up progress of a particular project.
It is necessary to document how decisions are made and reported back to the board (for approval, ratification or simply noting). It is also necessary to have clear terms of reference, tables of accountabilities and delegated responsibilities. This could include the power to appoint advisers and spend budgets up to a pre-agreed limit. Any arrangement needs to be permissible under a scheme’s trust deed and rules. Trustees would typically ask their legal advisers to assist in determining and documenting sub-committee powers to make sure that the agreed delegations are permitted under the scheme’s trust deed and rules.
At each trustee meeting trustees should be noting decisions made by any sub-committees and responding as appropriate. Any committee recommendations should be adequately reported to the board in time for them to take a decision at their meeting.
The Pensions Regulator believes that the effectiveness of sub-committees should be reviewed annually.