At least 50 per cent of schemes have a professional trustee

In its latest analysis of the professional trustee (PT) market, LCP said in the year to June 2023 there had been a 12 per cent growth in UK schemes using a professional trustee.

This means 50 per cent of schemes now have a professional trustee; of those 20 per cent have a sole trustee arrangement in place. 

LCP said 2023 had seen "unprecedented consolidation" amongst some of the largest players in the PT market, which had resulted in a higher concentration of scheme trustee appointments amongst a smaller pool of key players.

The majority of the 13 firms in the professional trustee market surveyed in LCP’s Sole Mates/Soul Mates report, have seen strong growth in the number of appointments over the last year. 

TPR code of conduct

Increasing regulatory burden on schemes and drives for efficiencies through sole trustee arrangements and succession planning were cited as reasons for the growth, as well  as the expectation that employers struggle to find employees who are willing and able to meet the increasing demands of trusteeship.  

LCP said it believed this was also why there had been a considerable interest of private equity (PE) investments in the professional trustee market over recent years. 

In line with the DWP’s recent call for evidence on trustee skills, PT firms were expanding their remit and services into wider areas by hiring directors with backgrounds in a number of different areas such as investment, covenant and insurance de-risking.

According to LCP, 62 per cent of respondents hired trustees with insurance de-risking expertise and over half had in-house covenant expertise and would actively contribute to covenant reviews and discussions. 

The Pensions Regulator's upcoming general code, funding code and its response to the Mansion House reforms was also influential in the expansion of PT numbers.

David Fairs, partner at LCP, said: “It will be interesting to see whether consolidation of professional trustee firms provokes a regulatory response, as a relatively small number of firms will potentially have significant influence over governance and operational standards of a significant number of retirement pots, as well as responsibility for investment strategy.”

Nathalie Sims, partner at LCP, author of Sole Mates said: “In a rapidly changing landscape professional trustee firms have actively evolved their approaches to support Pension Schemes and sponsors. As more schemes are taking an innovative approach to end game planning as a result of better funding levels, PTs are able to support these complex processes and provide the expertise and experience needed. We expect the market to remain buoyant for a number of years to come.”