Independent Trustee Services’ executive chair Chris Martin analyses the recent changes in the pension scheme industry and how being a trustee can now be considered a career.
At Independent Trustee Services, we have never seen it that way, with two of our board directors having been professional trustees since their early twenties and another of our directors recently joining us in her early thirties — a perfect example of how, for many, trusteeship is now a career in its own right.
With enhanced regulation, growing consolidation and more complex strategic activities, such as journey planning involving specialist risk transfer transactions, schemes are increasingly being encouraged to turn to professional trustees.
As an industry, we need to ensure we are recruiting from the broadest talent pool possible and raising the profile of the opportunities available, so that schemes have access to wide-ranging and diverse expertise that can deliver the best outcomes for members
Not only does this rapid rise in demand mean more people viewing trusteeship as a long-term career path, it also drives the need to build a more diverse pool of talent and expertise within the industry to support schemes in the modern-day challenges they face.
Regulator increases trusteeship standards
The Pensions Regulator has upped the ante on scheme governance, from new guidance on climate reporting to promoting greater diversity and inclusion within the industry.
As such, there is more pressure on trustee boards to understand requirements and how to meet them — the recent Mallowstreet independent trustee report revealed more than three-quarters of independent trustees say the growing complexity of pensions is among the top three challenges they must deal with when supporting their clients.
While many lay trustees do a fantastic job, there is now even greater strain on them in terms of time they have to devote to the role and the level of expertise they have to develop across an array of topics.
The Mallowstreet survey showed that about half of independent trustees say at least one of their clients is considering consolidation.
For example, there is increased risk settlement activity, as schemes move from being reliant on sponsors to derisking and risk transferring. In the first half of 2021, we were involved with more than £6.5bn of risk transfer deals. All of this requires a deep and specialist set of skills and greater diversity of thought.
Diverse background rising in trusteeship
That is where career trusteeship comes in. With its rise, professional trustees are increasingly younger, from varying social, ethnic and career backgrounds, bringing new approaches, thinking and expertise.
It means too that the company behind the professional trustee is increasingly important. An employed model places greater emphasis on investment in individual career development and the quality of technical expertise, whereas a ‘franchised’ model, while facilitating potentially more rapid firm growth, may not provide the same level of investment in the personal development of its ‘franchisees’.
Ultimately, encouraging people to take up a career in professional trusteeship will be critical to supporting schemes as they navigate the ever-changing regulatory landscape.
As an industry, we need to ensure we are recruiting from the broadest talent pool possible and raising the profile of the opportunities available, so that schemes have access to wide-ranging and diverse expertise that can deliver the best outcomes for members.
Chris Martin is executive chair at Independent Trustee Services
