The Department For Work and Pensions has said removing barriers to consolidation will help to professionalise trustee boards.

Speaking at the World Pension and Investment Forum in Paris this month, DWP senior policy manager David Farrar said that larger schemes are more likely to be better governed and trustees are more likely to have a more qualified skill set.

In June last year, the Financial Conduct Authority recommended that the DWP seek to remove barriers to pension scheme pooling in a bid to benefit from economies of scale and thus more resources.

DWP senior policy manager, David Farrar, said: “We are looking at ways in which we can remove barriers to consolidation, we are not saying that all small schemes have poor governance factors, but inevitably there is more professionalisation from larger schemes, and professionalisation of trustee boards to ensure that they have the necessary skills is part of it.”

In the FCA’s recommendation it noted that larger pension schemes are typically more attractive to asset managers, allowing trustees to negotiate lower fees per pound under administration.

Callund Consulting managing director, Nick Silver, welcomes the new proposals and sympathises with trustees current role.

Silver said: “Under the current structures I don’t think there is much that trustees can do and I welcome what the government have done to allow them to consolidate.

“I think we need to look to the Dutch system where we have larger funds and you can then have professional trustees who work in a much more fiduciary management role.”

The DWP also said that it aims to publish a consultation to clarify the legislation on the reporting of long-term investment risks by trustees in June.

Farrar, said: “We are now looking to introduce legislation and we plan on consulting in June on long needed clarification for pension trustees and what they should consider.

“We are looking at ways so that it [the investment statement] is not just a box ticking exercise but so it can drive real investment change.”

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