On the go: The number of UK pension schemes to have appointed a professional trustee rose by a 10th in the year to July 2022, new research has found.
A survey by LCP of 13 companies appointed to 2,174 schemes found that 43 per cent of pension funds now have a professional trustee, with one-third of these being part of a sole trustee arrangement.
The percentage of UK schemes — both defined benefit and defined contribution — without a professional or sole trustee set-up sat at 57 per cent in 2022, down from 61 per cent in the prior year.
There has been a 20 per cent increase in sole trustee appointments, where entire trustee boards are replaced with a professional trustee company, typically consisting of between two and four named individuals, LCP said. Nearly a quarter of sole trustee schemes had overseas parents.
The most quoted reason for schemes opting to move to a sole trustee arrangement was “regulation”, accounting for 45 per cent of responses. “Succession planning” made up 29 per cent of answers, while “cost” was cited in 26 per cent of responses.
LCP noted a number of potential drawbacks from having a sole trustee, including a lack of diversity of thought, high concentration risk “as an increased number of pension schemes are being looked after by a small pool of sole trustees”, and the possible loss of scheme knowledge if a sole trustee is introduced without a proper transition period.
The consultancy, however, pointed to improved succession planning and fee savings among the advantages of choosing a sole trustee outright, or moving to a sole trustee arrangement once a professional trustee has been appointed.
“Ongoing regulatory pressure as well as volatile market movements has resulted in specialist and dedicated support to be high in demand,” LCP partner Nathalie Sims said, with professional trustees “helping to navigate through the uncertainties and provide comfort that the schemes are well prepared for years to come”.
