For the first time more than half of UK pension schemes are under professional or sole trustee arrangements, according to new research.
LCP’s fourth annual Professional Trustee survey shows that professional trustees have rapidly become the ‘new normal’, while there has also been a step change in the number of sole trustee appointments.
The report shows that for the first time (since the report launched in 2021) 51 per cent of schemes have a professional trustee, of which a quarter have been appointed as sole trustee.
The report found that sole trusteeship saw a 30 per cent rise in the past year alone, doubling in numbers.
The LCP research that five professional trustee firms hold 90 per cent of the DB assets covered by the survey. These five firms are: LawDeb, IGG, Capital Cranfield, BESTrustees and Vidett.
LCP says expects this trend to continue, driven by strong recruitment growth by the firms over the past four years. Over 190 people have joined professional trustee firms since June 2023, suggesting no slowdown in growth across the market.
With the increasing complexity of ongoing pensions projects and the challenges of recruiting in-house pensions team specialists, schemes are looking to outsource more services. In response to this market trend, some PT firms have evolved their capabilities to access this market, offering services outside of traditional trusteeship.
Alongside this, LCP has also seen an increase in streamlined sole trustee offerings to meet the growing demand for efficiencies. These solutions go beyond governance, covering scheme services and, in some cases, investment management, providing a cost-effective option for smaller schemes.
As the professional trustee market continues to transform, LCP anticipates more involvement from the Pension Regulator (TPR) through the anticipated Trustee register, increased accreditation, potentially developing a framework for oversight of PT firms, and inviting some firms into relationship supervision.
LCP partner and, head of strategic pension relationships Nathalie Sims says: “This year’s report comes at a crucial time as the pensions landscape rapidly evolves through increased growth, new government reforms and interest from TPR.
“Following another year of significant growth in the professional and sole trustee sectors, the focus is now on how the industry will adapt—with accelerated growth, demand for streamlined offering, and greater oversight from The Pensions Regulator shaping the future.”
The Pensions Regulator chair Sarah Smart adds: “We welcome the valuable insight provided by this, and other, surveys into the development of the professional trustee and sole trustee market.
“We recognise the risks and opportunities presented by the development of the market and the various ownership models: the potential for higher standards and greater assurance as well as the concentration of decision-making in the hands of a few and detaching decisions from the membership. As set out in our Corporate Plan, we will continue to target our approach to the market in a strategic way, with savers’ interests at the heart of our approach.”