The submission outlines key strengths inherent in the current trust-based governance system for pension schemes. Notably, the flexible governance structures enable schemes to tailor arrangements according to specific requirements, whether through traditional boards or professional trustees. This adaptability supports optimal outcomes across varied scheme types.
Rachel Croft, Chair of APPT, commented:
“Accountability remains central to trusteeship, supported by clear fiduciary duties that guide decision-making in members’ interests. Boards composed of both lay and professional trustees encourage a balance of perspectives and expertise, thereby enhancing effectiveness. While proportional regulation allows schemes to focus on substantive matters, regulatory demands can present challenges, especially for smaller schemes. We believe that the growing and now well-established professional trustee market continues to deliver substantial expertise and continuity, including facilitating improved strategic planning for complex transactions and long-term schemes.”
Principal Points from the APPT Submission:
Barriers to Effective Trusteeship (Question 2)
While the current regime demonstrates significant strengths, APPT identifies certain obstacles affecting effective trusteeship. Traditional boards, particularly those with part-time lay trustees, may encounter difficulties adapting to rapid market developments and managing increasingly complex funding landscapes. Smaller schemes also face heightened challenges due to rising regulatory requirements and maintaining strategic priorities amid procedural constraints.
Conflicts of Interest in Professional Trusteeship (Question 5)
APPT addresses the potential for conflicts of interest relating to professional trustee firms providing Professional Corporate Sole Trusteeship services in its PCST code of practice. This includes identification and management of conflicts of interest at the selection and appointment stage; and transparent, robust governance processes in relation to any supplementary services.
The code also states that where legislation requires that trustees obtain professional advice, a PCST must make appropriate arrangements to obtain such advice from the appointed advisers to the scheme and that PCST firms must not rely on their own (or their affiliate firm’s) professional advice. In accordance with TPR’s General Code, trustees should also independently manage conflicts within their schemes’ policies and ensure full disclosure of material relationships to support transparency and mitigate risks.
Trustee Appointments and Capacity (Question 7)
APPT advises against imposing restrictions on the number of trustee appointments held by professional trustees. Capacity management is better determined by professional judgement assessing the complexities and requirements of each scheme.
Holding a number of appointments enables professional trustees to gain valuable insights and market experience, enhancing governance and member outcomes. Continuous monitoring, risk management, and quality control are considered more effective than fixed restrictions, which may inadvertently result in negative consequences.
Suitability of the PCST Model (Question 8) and Codes of Practice (Question 9)
APPT notes that the Professional Corporate Sole Trustee (PCST) model is most suitable for smaller schemes with limited governance budgets and whilst the model can be operated successfully on larger, complex schemes the increased complexity gives advantages to larger, more diverse boards. It is less likely to be less suitable for commercially operated funds such as Master Trusts, CDCs, and Superfunds. Suitability is primarily determined by operational models rather than scheme type. Current codes of practice, including the revised APPT PCST Code effective from 1 January 2026, provide comprehensive guidance for sole trustees and has been well received.
APPT recommends focusing on strong principles and industry accreditation to maintain standards, suggesting that proportionate oversight is required rather than arbitrary limitations or statutory regulation.
Trustee Competencies and Standards (Question 16)
Key competencies required of professional trustees include technical knowledge, governance capability, and interpersonal skills, are all grounded in Trust law and underscored in the Professional Pension Trustee Standards, which since 2019 have been set and maintained by APPT, working alongside TPR. These attributes are reflected within the requirements of the APPT accreditation process since 2020 and are classified into fitness and propriety, technical pension knowledge, behavioural traits, and soft skills. Professional trustees must demonstrate technical proficiency, sound judgement, and act in members’ best interests; qualities such as teamwork, leadership, and communication are also essential for effective trusteeship.
Accreditation and Professional Development (Question 17)
APPT underscores the significance of its accreditation process implemented in 2020 and encompassing now some 450 professional pension trustees. This requires pensions knowledge to be evidenced by examination as well as by practical pensions experience supplemented by annual ongoing Continuing Professional Development (CPD) and annual Reflective Discussions.
The Association is collaborating with stakeholders to continue to enhance the standards required and to ensure professional trustees keep pace with changes and new opportunities.
Formal recognition via an eventual move to mandatory accreditation of professional trustees would strengthen the observance of Standards across the sector.
Minimum Standards for Administrators and Service Providers (Question 22)
APPT advocates for the introduction of mandatory minimum standards for scheme administrators and integrated service providers, supporting improved service consistency, quality, cyber security, and more effective trustee oversight. These measures may address inequalities between large and small schemes.
However, implementation would require considerable investment from administrators, potentially increasing costs and reducing competition. Effective oversight and enforcement would necessitate additional regulator resources, possibly prompting further investment in bodies such as TPR.
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