‘Significant growth’ in professional sole trusteeship predicted for 2022

The pensions industry could see “significant growth” in the demand for professional corporate sole trustee (PCST) appointments during 2022, according to a report from Ross Trustees.

Ross Trustees attributed its prediction to three key factors: the speed and efficiency of PCST decision making, the ability to adapt to growing governance requirements for trustees, and the specialist skills to deliver risk transfer projects.

The firm’s findings drew on research carried out among 13 major consultancy firms that collectively advise a ‘significant majority’ of UK pension schemes.

It reported a “unanimous view” that the PCST market will continue to grow in 2022, with over three quarters (76 per cent) of responding consultancies believing that wider adoption of sole trusteeship was having a positive effect on the pensions industry, including 15 per cent who believed this impact had been very positive.

Nearly two fifths (38 per cent) of the consultancies anticipated ‘significant’ growth in PCST appointments over the next 12 months.

Almost two in three advisory firms (62 per cent) identified schemes with up to £100m of assets under management as the primary source of PCST appointments, while nearly one in three (31 per cent) were busiest supporting schemes of between £100m and £499m.

Ross Trustees trustee director, Shehzad Ahmad, commented on the research: “Our findings show a broad endorsement of the PCST model in the right conditions, and we echo the view that its wider adoption is having a positive impact on the pensions industry.

“Having experienced first-hand the growing demand for outside expertise to manage a multitude of risks and scenarios, it feels the time has come where the PCST model, backed by industry standards, will continue to come into its own as a viable option for many, although not all, schemes.

“Financial volatility, regulatory scrutiny, stringent legislation and sponsor distress are all likely to play a continuing role in prompting organisations to assess whether their trustee model supports the effective governance of their schemes.

“The need for decisive decision-making in a climate of increasing demands on trustees makes the PCST model a valuable alternative to co-trusteeship. The likelihood of further growth may mean 2022 brings proposition developments from industry to meet schemes’ evolving needs.”

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