Is a sole trustee the right choice?

Topic:

Market trends

Date published:

Monday, 6 June 2016

Author:

Clare Owen

Anecdotally it appears more employers are getting comfortable with the idea of a sole trustee for their pension scheme. Indeed, our own experience shows there has been an increase in interest in and appointments of sole pension trustees - over 30% of our professional pension trustee appointments are as sole trustee and about 30% of new enquiries are about sole trusteeship too.

So what is making sole pension trusteeship increasingly appealing?

Often in smaller defined benefit (DB) pension schemes, most of the employer nominated trustees (and sometimes member nominated pension trustees) are senior individuals who have less and less connection with the legacy scheme as people change over time. Many can be conflicted, meaning key pension scheme decisions have to be made either without them or in a situation where wearing more than one hat has become increasing difficult.

Add to this the fact that time away from the management of the business is not always the best use of their time, it becomes easier to see how taking away the operation and cost of a full trustee board and replacing it with a skilled and dedicated professional sole trustee becomes appealing. Appointing the right sole pension trustee can make things a lot easier for everyone.

The right choice will bring the right focus and ensure effective pension governance is in place. With wide market knowledge and lots of practical experience to draw on, an expert professional pension trustee will build a collaborative relationship between the trustee and scheme sponsor, giving comfort the pension scheme is in a safe pair of hands.

Others strongly argue that the status quo should stay. Why would you want to put all decisions in the hands of a sole corporate trustee when you have a perfectly performing pension trustee board? In this situation, you probably wouldn’t and don’t need to.

However, as employers focus on their 'live' pension schemes for current employees rather than on legacy ones - and pensions continue to be a political football - there is a rationale for at least looking at alternative options. At the very least, surely you want to ensure your perfectly performing pension trustee board is in fact that? Many trustee boards now have detailed flightpaths for their investment and funding, so why not take a similar approach with the organisation of your pension trustee board to ensure it is fit for the 21 century?

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