Professional trustee firms continue to dominate the pensions landscape, with the top 12 boutique trustee firms representing 2,000 pension schemes with around £1 trillion in assets, according to Isio.
According to the 2022 Professional Independent Trustee Survey report, the number of independent trustee appointments has increased again and income for the 12 major trustee firms has increased by 20 per cent in the last year.
Currently, 60 per cent of pension systems have a professional independent trustee, with that number expected to climb to roughly 90 per cent in the next five years. Their expanding clout and the sheer size of the assets they control shine a light on a sector that, despite its immense power, is little unknown. One of the 12 firms that participated in the survey compared the market to a “land grab for clients.”
Additionally, employers are increasingly appointing one of these firms as the sole trustee of their pension fund, displacing both member-nominated and company trustees. In three-quarters of the cases, the professional trustee company is now the board’s chair or the fund’s sole trustee.
With over £1 trillion in assets under their control, and based on the usual pension scheme profile, Isio estimates that these firms are responsible for over 5 million members and that there may be a push for further regulation in a largely unregulated industry.
Isio partner Mike Smedley says: “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.”