For the first time a majority (51%) of U.K. pension plans now have a professional trustee, according to the annual "Sole Mates" report on the sector commissioned by consultancy Lane Clark & Peacock.
As the U.K. pensions landscape becomes increasingly complex, with continuing pushes for consolidation, plans to introduce a “Pensions Dashboard” and the ongoing government review of the entire sector, plans have turned to professional trustees to address this complexity while also acting to avoid ongoing issues such as conflict of interest within non-professional trustees.
Five professional trustee firms held 90% of the defined benefit assets covered by the survey; LawDeb, IGG, Capital Cranfield, BESTrustees and Vidett. LCP also anticipated this trend to continue, driven by strong recruitment growth by the firms over the past four years. Over 190 people have joined professional trustee firms since June 2023.
Smaller U.K. pension plans are also adopting a sole trusteeship model, replacing the traditional trustee board and taking on its responsibility of oversight of the pension plan. According to LCP, there was also significant growth in the number of U.K. pension plans to adopt this model, doubling in number to now represent 25% of all plans surveyed by LCP.
For the report, LCP surveyed 15 Professional Trustee firms that represent 2,480 plans and 1,178 sole trustee appointments.
Sarah Smart, chair of The Pensions Regulator, which oversees workplace plans in the U.K., said in a news release: “We welcome the valuable insight provided by this, and other, surveys into the development of the professional trustee and sole trustee market.
“We recognize the risks and opportunities presented by the development of the market and the various ownership models: the potential for higher standards and greater assurance as well as the concentration of decision-making in the hands of a few and detaching decisions from the membership.”
In its corporate plan leading up until 2027, the regulator pledged to increase its focus on “new and increasingly significant” professional trustee entities.
Responding to the LCP report, Maggie Rodger, co-chair of the Association of Member Nominated Trustees, said: “We would like to see the (U.K. government’s) Department for Work and Pensions introduce measures to improve the accountability of sole trustees and to enable representatives of scheme members to be involved in their appointment.”
