Professional independent trustee appointments on the rise amid industry 'sea change'

More than half (60 per cent) of UK pension schemes have a professional independent trustee in place, with this figure expected to increase to around 90 per cent over the next five years, according to research from Isio.

The firm’s 2022 Professional Independent Trustee Survey revealed that the 12 largest trustee firms saw their revenue grow by 20 per cent in the past 12 months, with over 200 new appointments.

In addition to the rise in overall appointments, the research revealed that employers are commonly appointing one of these firms as the only trustee of their pension scheme, replacing member-nominated and company trustees.

It found that in around three-quarters of cases, the professional trustee was also chair of the board or sole trustee of the scheme.

Overall, Isio estimated that the 12 firms surveyed now have over £1trn of assets under their control, looking after over 5 million members in over 2,000 pension schemes.

However, the firm clarified that despite the "astonishing power" held by professional trustee firms, it remained a relatively unknown industry.

Indeed, Isio noted that one of the 12 firms that took part in the survey described the market as akin to "land grab for clients", with the company suggesting that there may start to be pressure for more supervision of the sector.

Isio partner, Mike Smedley, commented: “There’s a quiet revolution happening in the pensions industry as professional trustee firms grow rapidly. Traditional pension fund boards made up of company and member representatives seem to be in terminal decline.

“Professional trustees are helping to raise the standards of pension fund governance – bringing their expertise and market knowledge. And the door is wide open for them, as many employers struggle to find trustees in the face of growing regulation and responsibilities.

“This sea change in the industry means that millions of people with private sector pensions are relying on these firms to do a good job. It’s important that the public know who these firms are and have confidence in them, and this may come with calls for more regulation.”

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