The number of professional trustees has surged by 15% over the past 12 months, with firms intensively recruiting to meet the current demand and future growth expectations.
Research by WTW for its 2024 Professional Trustee Survey found that there had been an 11% growth in overall scheme appointments, with corporate sole trustee appointments rising by 14%.
Half of all defined benefit (DB) pension schemes now employ a professional trustee, WTW said, with almost 2,500 separate appointments covered in its survey of 15 of the largest firms in the space.
There are now more than 380 professional trustees working in the UK pensions sector – meaning each trustee would be responsible for six schemes on average.
Nearly half of all professional trustee appointments (48%) are now corporate sole trustees, the research showed, with a single third-party firm assuming full responsibility for a pension scheme’s trustee board. The remaining appointments are divided between trustee chairs (27%) and co-trustees (25%).
The data highlights the increased importance of professional trustee companies to the governance of DB schemes. The Pensions Regulator has also acknowledged this, stating in its latest three-year plan that professional trustees were “systemically important” to the UK pensions sector and would be a key focus of its regulatory efforts in the coming years.
Elsewhere in WTW’s report, the consultancy group said scheme size played a critical role in determining the type of professional trustee appointed. The corporate sole trustee model is particularly prevalent among schemes with less than £25m in assets, accounting for 73% of all appointments in this category.
Richard Campbell, senior director in WTW’s professional trustee group, noted: “The growth in professional trustee appointments across all areas has continued at an impressive rate, underscoring a pivotal shift in pension scheme governance.
“This trend reflects the increased trust and reliability that employers place in professional governance to help navigate the complex pensions landscape and address governance challenges efficiently.”
Recruitment trends
In response to the growing demand for services, professional trustee firms have been actively recruiting from within and outside the pensions industry.
The WTW report showed there had been a 15% increase in the number of professional trustees in the market over the past year.
Recruitment has increasingly drawn from diverse backgrounds, including human resources (21%), finance (13%), legal (13%), investment (13%), and covenant (3%), with actuaries and pension consultants remaining the most sought-after people to become trustees (29%).
The burgeoning professional trustee industry was also fostering greater diversity in gender, ethnicity and age, according to WTW.
Two in five (42%) professional trustees are female, compared to 28% of the overall trustee population. Nine in 10 professional trustees are white (91%), closer to the UK population compared to the overall trustee population, which is 96% white.
The median age of professional trustees is 51, younger than the overall trustee population’s median age of 61.
WTW’s Campbell added: “Professional trustees bring a wealth of expertise to pension scheme governance. With backgrounds spanning various disciplines, there has never been such a range of expertise on offer. Employers and trustee boards should consider experience, expertise, and working style when selecting a professional trustee.”
Further reading
‘Majority’ of schemes have professional trustees, research shows (7 June 2024)
TPR to scrutinise ‘systemically important’ professional trustee firms (3 May 2024)
Professional trustee firms incorporating diversity into business strategies (17 January 2024)
