DWP 'Trust-based pension schemes: Trustees and governance, building a stronger future' consultation

Commenting on the release of the consultation, Trust-based pension schemes: Trustees and governance, building a stronger future, from Department for Work & Pensions, 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.”

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