Shani McKenzie, Head of Sole Trustee Services, Hymans Robertson says: “The consultation picks up on the pros and cons of having multiple scheme appointments. Interestingly, only 68% of ‘professional’ trustees have multiple appointments, compared to 45% of other corporate trustees and 15% of non-professional trustees. Providing guidance on the appropriate number of schemes is therefore tricky, as both the balance of the pros and cons will depend on the market landscape and the form of trusteeship in place. Guidance therefore needs to be flexible to reflect these factors and the be fit for purpose across all forms of trusteeship. It is worth noting that the definition of ‘professional’ trustee goes beyond those working within a professional trustee firm structure, but professional trustees may welcome DWP’s statement to explore a higher bar of accreditation for professional trustees. They may prefer this to increased ongoing regulation. If the government sets out the standards that it wishes trustees to meet on a statutory basis, this approach should provide the industry with greater confidence in professional trusteeship. However, the standards need to be robust and not just exam based, covering both technical and non-technical, such as those set out in the consultation. The consultation rightly picks up, that whilst the pace of growth for professional trusteeship is marginally slowing, the scope of services is growing both in terms of types of arrangements covered as well as services broader than trusteeship. Taking time to consult and opine on the conflicts and processes needed around these services as well as diversity, appointment processes and the need for specialisms will be welcomed across the industry. Similarly looking at the representation of member views across the professional corporate sole trustee model as well as multi-employer DB and DC arrangements is timely given the diversifying arrangements for pension provision. The spectrum of trustees covered by this consultation is broad, from newly appointed lay trustees with little pensions background through to experienced professional trustees. In addition, the broad structure of trust-based schemes is evolving too. DWP will need to find outcomes that work in all these instances. Thankfully, the consultation notes from the 2023 Call for Evidence showed that the majority of trustees are well-supported, knowledgeable, and hard-working. However, the responses also revealed that trustees would like more support to help them develop in a changing and increasingly complex environment. DWP needs to carefully walk the line of not introducing further onerous regulation on those well-supported knowledgeable trustees, whilst raising the bar for those who need more support.”
Ruari Grant, Head of policy & external affairs at TPT Retirement Solutions, said: “We’re really pleased that government is proactively looking at the future of trusteeship – it is the foundation of how occupational pension schemes provide for their members. For the most part, trustee boards provide exceptional governance and oversight of their schemes, but we’re going through an almost unprecedented period of change in the pensions market, from DC megafunds, to DB superfunds and CDC schemes, all alongside increased attention on investment strategies and innovation. Naturally, trustee skillsets – and internal governance – must therefore keep up with these trends. So it’s right we discuss the increase in professional and sole trusteeship in recent years. This shift helps bring vital skills and expertise to trustee boards, but it can also introduce commercial pressures which can act against members – this potential for conflict need to be carefully managed to maintain full alignment with fiduciary duties to members. This is the right time for industry, government and the Regulator to come together and ensure that the trustee model is as well prepared as possible to govern the schemes and consolidators of the future.”
Lucy Dunbar, Sackerspartner, comments: “Trustees are at the helm of every pension scheme, ensuring that the wheels turn smoothly and that members’ benefits are delivered accurately and on time. A consultation which supports good standards of trusteeship and recognises the importance of administration in well run, well governed pension schemes is warmly welcomed. The key question is how to harness best practices in trusteeship and administration and ensure that pension schemes and their members, both now and in the future, benefit from both. Trusteeship comes in differing forms, ranging from professional through to lay, as well as some variations in between. Likewise, pension schemes increasingly come in any number of different shapes and sizes, from more traditional employer-sponsored arrangements through to DC master trusts and DB superfunds. Recognising such a broad array and the complexities involved is the real challenge for today’s consultation. It will therefore be interesting to see how the Government’s proposals evolve, with some careful navigation needed to help ensure high standards whilst accommodating so many vehicle types.”
|
