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Hugh Cutler: Trustees must raise the bar on investment governance

Mobius Life chief commercial officer Hugh Cutler says political reforms and greater demand for transparency will mean new responsibilities for trustees

by Emma Simon
June 17, 2025
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Trustees of defined contribution (DC) and defined benefit (DB) pension schemes face a moment of real challenge and opportunity. The direction from Government and regulators is clear: stronger governance, better outcomes, more value for members, and – from a UK Government perspective – solutions that encourage economic growth. Yet many schemes are struggling to match these expectations with the internal resources and structures currently in place.

The problem is not a lack of willingness. Trustees are deeply committed to their fiduciary duties. The challenge lies in execution. How can trustees oversee increasingly complex investment strategies, respond quickly to shifting regulations, and demonstrate full transparency without operational and governance risk?

For schemes that want to stay ahead, the answer may lie in how investment in infrastructure is approached and who they choose to appoint to implement their strategy.

A new standard of professionalism

The Pensions Regulator (TPR) has made clear that trustees must raise their game. Whether through the emerging single code of practice, enhanced expectations around climate-related disclosures, or the growing focus on member value, regulatory scrutiny is intensifying.

These shifts are not cosmetic. The trend is toward increasing accountability and raising expectations across a number of areas, including scheme performance and cost transparency, investments into illiquid and private markets, climate-aware and ESG-aligned investment strategies while also evidencing how they provide value for money for members.

The move toward scheme consolidation and the growth of professional trustee firms are symptoms of this broader change. Trustees now require the same data, tools, and operational support that institutional investors take for granted.

At the heart of these changes is the government new Value for Money (VFM) framework which TPR, Department for Work and Pensions (DWP) and the Financial Conduct Authority (FCA) have collaborated on, which goes beyond fee comparisons to include net investment performance, service quality, and governance oversight.

Delivering on this framework is not simply a compliance exercise. It demands clear reporting, efficient implementation of investment advice, and an infrastructure that supports real-time insight. This is particularly challenging for schemes relying on legacy administration platforms or overly narrow investment menus.

In this context, trustees need service providers who can offer more than access to a few prepackaged funds. They need partners who provide the operational expertise for sophisticated, cost-effective, and transparent investment delivery.

Private markets and the Mansion House agenda

The Mansion House reforms have added another layer of strategic complexity. With the Accord enlisting a number of large DC schemes to allocate at least 10 per cent of their default funds to private markets by 2030, Trustees are being asked to venture into asset classes once considered out of reach.

For many schemes, the barriers are structural rather than philosophical. Private markets typically come with high minimum investment thresholds, operational complexity, and governance burdens that smaller or mid-sized schemes cannot handle alone.

What trustees need is a mechanism that allows access to these markets in a way that is administratively viable, liquid where necessary, and compliant with permitted link rules.

Another challenge facing trustees is the ability to remain objective in manager selection and asset allocation. Vertically integrated platforms that promote in-house funds can create conflicts of interest and restrict the ability to implement investment advice fully.

Open architecture, which enables schemes to access a wide universe of strategies from many third-party managers, is critical to preserving independence and control. Trustees should look for platforms that are fund-agnostic, flexible, and able to onboard new managers quickly.

This kind of architecture also improves the quality of decision-making. With a broader toolkit, trustees can create tailored portfolios that better match their scheme’s objectives, liabilities, and appetite for innovation.

Governance that moves at pace

One of the most under-appreciated risks in pension management is delay. Delays in onboarding new strategies, in responding to adviser recommendations, or in adjusting allocations in response to market movements can all harm member outcomes, so speed and and flexibility must be built into the governance framework. 

This not only includes quick access to new funds but support for bespoke structures, including blended public and private portfolios, the ability to price, report on, and monitor non-daily assets and real-time dashboards for performance and cost attribution.

Many legacy platforms cannot deliver this level of agility. Trustees should be asking whether their current provider has the expertise or the appetite to adapt.

Using technology to simplify complexity

Investment administration is a technical domain. Done well, it fades into the background. Done poorly, it creates risk and cost. For trustees trying to meet their obligations without expanding headcount or taking on additional burden, automation is no longer a luxury.

As trustees look forward, several priorities stand out. They need infrastructure that can handle the investment demands of a maturing and diversified pensions sector. They need transparency and control over costs. They need the flexibility to adopt new asset classes and the governance tools to oversee them.

Not every provider is equipped to support this new world. Trustees should be seeking out partners that specialise in working with institutional investors, and offer full open architecture access.. This is not about outsourcing fiduciary responsibility. It is about equipping trustees to discharge that responsibility more effectively. In a world where the professional bar continues to rise, selecting the right platform partner is an important governance decision for the board to make.

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