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Over two thirds of DB Scheme sponsors expect to increase use of Professional Trustees

25 Jan 2024

Over two thirds (68%) of corporate sponsors of DB pension schemes said it’s likely that they’ll increase their use of professional trustees in the future, according to a survey by Hymans Robertson. The research also found that over two thirds (70%) of companies expect to review their trustee boards at least every six years or less. The leading pensions and financial services consultancy welcomed these findings, as schemes will need boards with expert skill sets to meet the expectations of TPR's new General Code, and the evolving sophistication of endgame strategies. These changes are likely to see schemes focus on governance models utilising more specialist skills sets and trustees with operational experience of delivering complex projects such as buy-in to buy-out strategies.

The survey also found that better management of advisers and costs (47%), difficulty in finding future lay trustees (43%), access to expertise of trustees involved in multiple schemes (38%), and expert board-chairing skills (36%) were cited as the reasons for this increased use.

The research also explored what companies thought about their current pension governance models and how they would like these to evolve in the future. Overall, respondents felt that their current trustee governance models were working well. Nearly three quarters (72%) were confident that their scheme governance was fit for purpose to deliver a DB endgame strategy.

Commenting on the survey results, Leonard Bowman, Head of DB Endgame Strategy, Hymans Robertson, said:

“It seems clear from this research that the role of professional independent trustees in UK retirement provision will be a much more dynamic aspect of the future management of DB endgames, which could lead to positive change and improved outcomes for scheme members. Whether managing DB endgame strategies, open DC trusts or new forms of retirement provision, the role of trustees in UK retirement provision will remain central for many years to come.

“It feels like this may become a much more dynamic aspect of the future, if companies follow through on their intention to regularly review their trustee boards and, in some cases, those reviews lead to change. Not only can we expect greater use of professional trustees, but how companies evaluate their professional trustees is also likely to evolve and become more sophisticated. Companies have standard governance timetables for reviewing their advisors but it remains to be seen whether their professional trustees will be integrated into this cycle in the future. If they are, we could see the development of more sophisticated corporate objectives and measures for their professional trustees, which could in turn lead to evolution in the professional trustee market. A culture of strong scheme and corporate governance are important to ensuring good member outcomes and would therefore be welcome.”

The report on the survey findings can be read here.

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