Where the Duty Comes From
Trustee knowledge and understanding, universally shortened to TKU, is a statutory duty introduced by the Pensions Act 2004 at sections 247 to 249. Before that Act there was a general expectation, derived from trust law, that a trustee would inform themselves properly before acting. The 2004 Act turned that expectation into a specific, freestanding obligation with its own content.
It applies to individual trustees of occupational pension schemes and, where a scheme has a corporate trustee, to the directors of that company. Being one director among several does not dilute it.
What Trustees Have to Know
The duty has two limbs, and they work differently. The distinction between them is the part most often got wrong.
The first limb is knowledge and understanding of the law and the principles. Trustees must be conversant with, and have appropriate knowledge and understanding of, the law relating to pensions and trusts, together with the principles relating to the funding of occupational schemes and to the investment of scheme assets. This is general knowledge. It is about the subject, and it does not depend on which scheme you happen to serve.
The second limb is knowledge of your own scheme. Trustees must be conversant with their scheme's own documents. In practice that means the trust deed and rules and the amendments made to them, the Statement of Investment Principles, the Statement of Funding Principles for a defined benefit scheme, and the other documents recording the policies the trustees currently operate. This limb is entirely scheme-specific and no amount of general pensions knowledge substitutes for it.
A trustee who knows the Pensions Act 1995 thoroughly and has never read their own trust deed is not meeting the duty. Neither is a trustee who knows their scheme's rules inside out and cannot say what a Statutory Funding Objective is.
When the Duty Bites
The duty attaches from the point a trustee takes office, and the knowledge must be acquired within a reasonable period afterwards. It is not a precondition of appointment. A newly appointed member-nominated trustee does not need to pass anything before they can validly act, and a board is not improperly constituted because its newest member joined last week.
This is a common misconception and a reliable exam trap. It is also good policy. If knowledge were a precondition, most schemes would struggle to fill member-nominated seats at all.
What the duty does require is that induction actually happens, and happens promptly. A trustee who has been in office for a year and has still not read the trust deed is not sheltering behind "a reasonable period".
What The Pensions Regulator Expects
The Pensions Regulator's General Code of Practice, which came into force in March 2024, consolidated ten of TPR's earlier codes into a single code, including the former code on trustee knowledge and understanding. It sets out TPR's expectations on induction for new trustees, on maintaining knowledge over time and on the capability of the trustee board as a whole, applied proportionately to the size, nature, scale and complexity of the scheme.
A code of practice is not itself law. Failure to follow it is not automatically a breach of a legal requirement. What it is, is evidence: a court, TPR's Determinations Panel and the Pensions Ombudsman can all take non-compliance into account when deciding whether a legal duty has been met. Trustees who treat the General Code as optional reading tend to discover this at the worst possible moment.
For defined contribution schemes and the DC elements of hybrid schemes, there is a further reporting layer. The annual Chair's Statement must cover, among other things, how the trustees have met their TKU requirements. That turns TKU from a private obligation into something the board has to write down and sign each year.
TKU Is Not the Same as Being Fit and Proper
These two get conflated constantly, and they are different concepts doing different work.
TKU is about competence. Do you know enough, and do you know your own scheme?
Fitness and properness is about eligibility and integrity. Are you disqualified from acting at all? Under the Pensions Act 1995, certain events disqualify a person automatically and by operation of law, including undischarged bankruptcy, a conviction for an offence involving dishonesty or deception, disqualification as a company director, previous removal as a trustee for misconduct or mismanagement, and lacking capacity. Separately, The Pensions Regulator can make a prohibition order against a person it does not consider fit and proper, and can suspend a trustee as an interim measure.
A trustee can be perfectly eligible and still be failing their TKU duty. The two are tested separately in the exam and they sit in different units of the syllabus: TKU threads through the appointment and organisation of trustees, while the wider duties framework sits in fiduciary duties, conflicts and decision-making.
How Trustees Evidence It
There is no statutory prescription of how a trustee must acquire the knowledge, and no legal requirement to hold any qualification in order to serve as a pension trustee. What matters is that the knowledge exists and can be shown to exist.
In practice, boards evidence TKU through some combination of:
- The Pensions Regulator's Trustee Toolkit, which is free, made up of 12 modules with 12 assessments, and takes roughly 18 to 22 hours. It records completion, which makes it the most straightforward evidence available to most trustees, and it costs nothing.
- A documented induction process for new trustees, covering the scheme's own documents rather than only general pensions material.
- A training log and a skills or knowledge gap assessment maintained at board level, which is also what TPR's General Code expects a well-run board to have.
- Formal qualifications, where a trustee or their firm wants an assessed and certificated outcome.
Where the APT Fits
The PMI Award in Pension Trusteeship is the formal qualification route on that list. It is a Level 3 qualification assessed by one 60-question multiple-choice exam of 90 minutes, with a nominal pass mark of 75%, and its syllabus is built on The Pensions Regulator's indicative syllabus for trustee knowledge. That is why the ground it covers looks so familiar to anyone who has worked through the Toolkit.
Two honest caveats. First, the APT is not required by law and passing it does not by itself discharge the TKU duty, because the second limb of that duty is about your own scheme's documents and no external exam can test those. Second, the APT is a qualification rather than a substitute for induction. A trustee who passes the exam and has still not read their trust deed has closed one gap and left the other open.
What the APT does provide is an assessed, certificated demonstration of the general knowledge limb, which is why both professional trustee accreditation regimes require it. If accreditation is your reason for reading this, our guide to becoming an accredited professional pension trustee sets out where the exam sits in the sequence.
Practical Reading for a New Trustee
If you have recently taken office and want a defensible starting point, the conventional order is:
- Your own trust deed and rules, and any deeds of amendment
- The most recent minutes, so you understand what the board is currently dealing with
- The Statement of Investment Principles, and for a DB scheme the Statement of Funding Principles and the latest actuarial valuation
- The Trustee Toolkit, worked through rather than clicked through
- The Pensions Regulator's General Code of Practice, at least the governance modules
Items 1 to 3 are the second limb of the statutory duty. Items 4 and 5 are how most trustees build the first.
Testing Yourself
Reading is how you acquire this material and answering questions is how you find out whether it stuck. If you are working towards the APT, or simply want to know how much of the general limb you already hold, practice on The Trust and Its Creation is free on Trustee Prep with no card required.
Trustee Prep is an independent practice platform and is not affiliated with or endorsed by The Pensions Regulator, the Pensions Management Institute or the Association of Professional Pension Trustees. This post describes the statutory framework in general terms and is not legal advice on any particular scheme.
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