There are fundamentally two types of professional trustees, those that are independent and those dependent for work on a firm they belong to. I mean here the people who call themselves “pension trustees”.

There are two views, the views of an independent individual and the house view of a firm of professional trustees.

I was put in my place yesterday when referring to an independent as not “professional”. If I could have said a more stupid thing , I can’t imagine it. What I was using was a short cut to trying to compliment the trustee’s professionalism by being independent but it cam out all wrong!

I have no problem with professional trustees whose firms strive for dominance but I worry that so many firms have ambitions to compete against each other and against independent trustees in a shrinking market. I imagine that backing the funding of the new professional trustee firms is a business case that assumes expansion, yet the number of occupational schemes is reducing.

• DB schemes are being bought out by insurers. They are beginning to consolidate into superfunds as a means to run on.
• Single employer sponsored DC occupational schemes are winding up with members being transferred to multi-employer “commercial master trusts”.
• Master trusts are consolidating to meet the “scale” requirements of a Government determined to have substantial schemes.
• There remain a large number of DC GPP schemes and the prospect of consolidation for them from 2028 when the “override” comes in enabling them to benefit from scale elsewhere
• We now have workplace collective (CDC) pensions which will compete with DC master trusts and consolidate more DC occupational pensions

I am wondering where the growth is coming from for professional firms if it not in replacing independent trustees and in particular member nominated trustees.

The Association of Member Nominated Trustees (AMNT) is changing its constitution to open membership to people who are not member-nominated trustees (MNTs).

Directors, scheme secretaries and employer-nominated trustees from private and public sector schemes will be eligible to join under the association’s first widening of its membership. Instead of joining as full MNT members, these representatives will be eligible for associate membership.

I spoke yesterday to a professional pension firm who explained that they are management consultants, ensuring that the trustees that a scheme like Pensions Mutual could rely on to ensure its governance was compliant with the TPR Code we will be bound by.

In this world where compliance is foremost, it appears that the member is no longer the main pre-occupation of pension trustees as a whole, a recent survey suggested that compliance and the sponsor of the scheme rank higher in priorities than member outcomes.

The preoccupation of the Pensions Regulator appears to be compliance with codes that demand formal governance. This from a report on trusteeship in Professional Pensions. It is  itself a report of trustees to be found in unconsolidated pension scheme

There is little space for the independent trustee, independent that is from Trustee firms who are largely funded by private equity.

But the phrase “professional trustees” quoted in this TPR report does distinguish between a “professional trustee firm” and an “independent professional trustee” as two types of professional trustees.

This from OMB research for the Pensions Regulator

This is not a criticism of the state of trusteeship but it does beg questions. Is there space for so many variants of trusteeship and is the lack of space meaning that increasingly trustee firms are become governance consultants, a type of management consultant that includes secretarial services and advisory.

It is perplexing to those like me, trying to understand what trustees priorities are and how to approach them. I sense that there is such diversity amongst pension trustees that the member’s needs are proving secondary to the professionalism of the trustee, by which is meant compliance and commercial success.

We have gone a long way from the trusteeship that was driven by employers, unions and indeed members. Instead we have professional firms whose aim is to professionalise governance to a point where the member is seen as a liability, capable of using artificial intelligence to sue the firm.

This may require further training in compliance for trustees. It is a well marked road but I worry it is down the wrong road. Insurance for trustees is now seen as essential ; –  the threat of being sued for being non-compliance is pre-eminent in the minds of trustees. The independent trustee is considered as taking unnecessary risks by everyone it seems except those who acting for the member.

The inevitable conclusion is that good governance increases with the size of an occupational scheme and the distance the scheme is from the individual  member