The formal authorisation for professional trustees would represent a “sea-change” in managing governance standards, the Pensions Management Institute (PMI) has stated.

In response to evidence given to the Work and Pensions Committee (WPC) by The Pensions Regulator (TPR) CEO, Charles Counsell, PMI director of policy and external affairs, Tim Middleton, stated that, whilst the professional trustee sector is to have a “central role” in TPR’s strategy, he was sceptical about the process.

Middleton commented: “Formal authorisation would however represent a sea-change in managing scheme governance standards as it would in effect constitute a ‘licence to practise’ for professional trustees.”

Though voicing his concern, Middleton went on to say: “We can however state that we would fully support TPR in whatever regulatory model it ultimately chooses to adopt and would be perfectly positioned to support trustees in adapting to any new regulatory culture.”

This comes in response to the WPC’s inquiry into defined benefit (DB) pensions with liability driven investments (LDI) following volatility in the gilt markets which was launched in October of this year.

Counsell had previously given evidence to the inquiry as he rejected claims that the regulator put pressure on DB pension schemes to adopt LDI when they didn’t feel it was appropriate.

In his evidence, Counsell stated that TPR has believed for some time that pension schemes should have a professional trustee sitting on their board, but the reality was that the capacity of the professional trustee market did not match the number of schemes.

For professional trustees, there is no authorisation regime, he noted, adding that there was a question about whether there should be an authorisation process around professional trustees.

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