Growing regulatory complexity remains a top industry challenge, research has suggested, with over three quarters (76 per cent) of independent trustees admitting that they struggle with the growing complexity of pensions.

The research, from MallowStreet, found that a further 51 per cent of trustees identified endgame plans as a top challenge, whilst 46 per cent were concerned about GMP benefit equalisation.

Environmental, social and governance (ESG) requirements are also thought to be adding to this regulatory burden, as more than a third (36 per cent) cited ESG integration as amongst their top challenges.

In addition to this, 32 per cent of independent trustees who were worried about the growing regulatory burden also said that improving their training in ESG integration and implementation is the second biggest challenge they face.

The majority (89 per cent) of independent trustees said that embedding ESG principles in risk management is their preferred approach to this issue, while 67 per cent would also like to see active engagement and stewardship.

However, 57 per cent stated that they do not believe their preferred ESG approaches can be applied evenly across asset classes.

There were also differences by size, as the report found that larger schemes are typically further ahead in their ESG implementation and require better metrics.

In particular, it found that 69 per cent of independent trustees on schemes under £1bn are responsible for interviewing managers on ESG strategy.

In contrast, nearly three quarters (73 per cent) of trustees on schemes of over £1bn are responsible for reviewing ESG metrics instead, with 82 per cent focusing on active stewardship and engagement.

In addition to this, 45 per cent of schemes over £1bn would divest from certain companies and sector, compared to 30 per cent of schemes under £1bn, which instead favoured embedding principles in risk management.

Association of Professional Pension Trustees chair, Nita Tinn, highlighted the report as evidence of the increased burden being experienced by professional trustees as they strive to keep up with increased regulatory complexity.

“Through our various sub-groups, we aim to provide trustees with the tools and training they need to navigate critical issues from ESG through to diversity and inclusion," she added.

“We want our tools and training to be a key resource for all our members including sole traders and smaller firms who may not have the same access to internal resources as some or our other members who work at larger firms.

“It is vital that professional trustees are equipped with the knowledge to take the lead on boards and challenge asset managers on ESG integration and fees, whilst also making it clear what the key concerns of the trustee board are to ensure meetings are productive.”

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