At 20-20 Trustees, we have seen a rise in the number of occupational pension schemes using sole trusteeship, with schemes recognising the positive benefits this support can offer.
The popularity in appointing a sole trustee has risen, as schemes find it increasingly difficult to recruit lay trustees. It’s hardly surprising, after all it’s not an easy sell asking someone to apply for a role that on average takes 26 days a year under an increasing regulatory regime which can have significant implications if they get it wrong.
Of course, sole trusteeship may not be suitable for every scheme and should be considered carefully.
The key benefits of having a sole trustee
With the increasing regulatory compliance and complexity of pensions, using a sole trustee brings many positives:
1. Removes the need to find trustees – finding member nominated trustees is becoming increasingly difficult; the need to have a member nominated trustee is removed where an independent trustee acts as the sole trustee.
2. Improve scheme governance – the sole trustee can navigate through the legislative/regulatory frameworks and typically enables a more effective governance system.
3. Removes potential conflicts of interests – for employer nominated trustees.
4. Cost and time savings – speeds up making decisions and actions; decisions can be made outside of trustee meetings; making faster decisions so that opportunities aren’t missed; advisers can be constructively challenged and ultimately overall improved value for the benefit of both the sponsor and the scheme members.
5. Sponsoring employer can focus on their business and scheme strategy – rather than the day-to-day operations of the pension scheme.
If the above benefits resonate with you, and you’re looking to ensure your scheme has a professional governance structure; then sole trusteeship may be the right option for you and your members.
In the past, the sole trustee model has been particularly favoured by smaller schemes who may be struggling to keep up with the pace of regulatory and legislative demands. However, this is no longer the case; with the increasing governance landscape and its associated risks, time, and resources requirements, it is now more attractive to schemes of all sizes.
Choosing a trustee firm to work with
One common concern frequently cited is around ‘independence’ and therefore a key point to consider is the trustee firm’s peer review system, which is essential for robust governance. This is going to be even more critical with the new single Code of Practice on the horizon which requires an effective system of governance.
Here at 20-20 Trustees, we have a robust system with our Sole Trustee Oversight Committee (STOC) that operates across our sole trustee appointments.
- It provides an additional layer of supervision, independence, and strategic direction from experts in areas such as strategy, covenant, legal and investment.
- STOC holds strategic discussions and feeds in best practices to ensure consistently high standards are applied across all of our sole trustee schemes. This allows us to enhance governance, reduce costs and improve value, whilst continuing to manage risk and ensuring appropriate journey planning of our schemes.
- And perhaps, most importantly, it increases the diversity of thought and ideas for a richer set of solutions, which can often otherwise be lost when moving to a sole trustee model.
Done well, the institutionalisation of the sole trustee proposition provides a compelling business case for many schemes.
20-20 Trustees were voted Independent ‘Trustee of the Year’ in 2021, with one third of our client base sole trusteeships (with assets ranging from £1m to £1bn). For further information on how we can help with your Sole Trustee requirements, check out our dedicated webpage, where you can download our factsheet and get in contact: Click here