In response to the growing influence of professional trustee firms on UK pension schemes, the Pensions Regulator (TPR) announced its new framework for professional trustee oversight last month.
More than half of UK pension schemes now have a professional trustee, with almost half of these appointments being on a sole trustee basis.
With 10 of the largest professional trustee firms governing more than a trillion pounds of savers’ retirement income, TPR appears to be concerned about a concentration of risk. TPR’s chief executive, Nausicaa Delfas, said: “As part of our new risk-based and outcome-focused approach to regulation, we are extending our engagement with these firms to identify and mitigate any risks to pension savers.”
TPR will focus its engagement with these firms on the following areas:
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How professional trustee firms manage relationships with employers
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Profit and remuneration models and how this could impact decision making and service levels between clients
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Sole trustees – reasons for these appointments and the internal controls behind them once appointed
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In-house advisers and the risk of compromised decision making, advice, and conflicts of interest
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Scheme decisionmakers – the knowledge and understanding of those who make daily decisions on behalf of the scheme.
Following a detailed risk assessment over the next year, TPR then expects to communicate more widely to the professional trustee industry and “make clear [its] expectations”, working with the industry to “identify appropriate mitigations that can be implemented”.
TPR extending its prudential approach to regulation of professional trustee firms signals its commitment to ensuring proper governance of pension schemes, protecting the millions of savers in the UK. Firms who place pension savers’ interests at the heart of their business will find themselves in the strongest position under the new framework.
Our professional pensions trustee arm, Burness Paull Pension Trustees Limited, may be small in size but is big in expertise. Our directors are experienced lawyers and are backed by a diverse team with actuarial, scheme secretarial, and pensions administration backgrounds. Robust governance and decision making are therefore part of our nature, and we have all the internal controls that you would expect from a leading commercial law firm. Get in touch if you would like to chat.
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