AMNT welcomes the publication of the LCP Soul Mates Survey 2024 which is a high quality and thoughtful analysis of the current state of the Professional Trustee and Sole Trustee market.

AMNT welcomes this review of the growth of this sector but cautions that the regulatory framework must be updated in order to ensure proper oversight and protection for members. A number of issues that need to be addressed urgently are raised by the report. These include that:

On average 30% of Professional Trustees and 40% of Sole Trustees do not have to face a tender process*. AMNT believes that there needs to be greater transparency and oversight on these appointments – the Regulator needs to act; The survey highlights that professional trustee firms are beginning to offer a range of other scheme services alongside sole trusteeship. Is this development of “streamlined sole trusteeship” perilously close to a form of consolidation but outside the regulatory regime? AMNT also queries whether sole trustees can manage the inherent conflict of interests arising from the need to hold to account the performance of scheme administration or investment consultancy for example if it is supplied by the sole trustee’s own company.

In addition to the issues raised by LCP, the AMNT has further misgivings about the pace of change and lagging regulatory framework. These include: There are currently no meaningful safeguards over who can be appointed as a sole trustee. Whilst they tend to be professional firms - they do not need to be and this can cause problems. These appointments effectively circumvent the intentions of the 1995 Pensions Act, with possible serious consequences (A recent case at Norton Motorcycles is a salutary warning here); More widely, the process of moving from a trustee board to a sole trustee appears, in many schemes, to be at the employers’ discretion - not needing the agreement of or even consultation with the existing board, let alone members;

The removal of lay trustees and the member voice from the governance process can, in the sponsor’s eyes, shift the dynamics towards the sponsor’s agenda and away from members. In days when achieving security for members through buy-out was a challenging goal this mattered less. Now, with greater choices about end game and with surpluses to share/withdraw, this is especially significant;

Whilst professional sole trustees are not acting alone and can, and do, consult colleagues, the diversity of voices of a trustee board is much reduced and there is a danger of industry ‘groupthink’. A well functioning board needs a wide range of skills, to deal with issues of administration, communications, law, investment and risk management, not to mention the diversity of thought brought by a non-finance industry background;

Allied to this, with the growth in sole trusteeship appointments, and the mergers of various professional trustee firms, there is an increasing concentration in the market. Any corporate groupthink, or house view, could therefore become even more concentrated. In addition, this growth in the market also creates the risk of individuals taking on too many trusteeships. This can perhaps be managed in normal times, but could create serious problems in a market emergency situation. 

Commenting on the fact that Professional and Sole Trustees are becoming the ‘new normal’ according to the LCP survey, Maggie Rodger, Co-chair of the AMNT said:

“The professional trustees I meet are clearly concerned to act fairly and expediently to provide good (sole) trusteeship for their schemes. The problems and my concerns are not about them as such.  I have heard them expressing some of the above concerns too and the increasing industry focus on the issue will hopefully help to find some answers.

“Where schemes genuinely cannot find trustees, usually because the scheme is so mature that older members are not willing to stand as an MNT, then for a scheme with a short horizon to closure, sole trusteeship might be sensible.

“However, the problem areas above mean the role has much more complexity than might at first appear. There are also other ways to achieve the desired end, such as the various degrees of outsourcing, which perhaps need greater focus, or simply bringing a professional trustee onto an existing board for a specific task, eg buy out negotiations. 

“Government and the Regulator will need to think deeply about how they want the market to develop and what protections need to be put in place to ensure members are not disadvantaged or put at greater risk”

“We would like to see the Department for Work & Pensions (DWP)introduce measures to improve the accountability of Sole Trustees and for their appointment to be the responsibility of the trustee board, and/or involve consultation with members.

“Additionally, whilst creating a register of trustees the Regulator should work with the industry to create a higher bar of training/experience for sole trusteeship as well as a fit and proper person test”.

Maggie Rodger, Co-chair, the AMNT

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-Ends-

Notes to Editors

*Survey, Page 13 - “On average our data suggests that c70% of PT Board appointments arise

through tender with a slightly lower average of c60% for Sole Trustee “

The Association of Member Nominated Trustees was established in September 2010 to bring

together member-nominated trustees, directors and representatives of public and private sector

pension schemes to give trustees a collective voice, to provide mutual support and information

exchange and to campaign on matters of concern. The AMNT has around 800 members from

pension funds with collective assets of approximately £1-trillion.

For further information please contact: Andrew Sharkey 07711 825439

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