The pensions industry has broadly welcomed the government's plans to strengthen trustee governance and administration standards, although concerns remain about trustee independence, conflicts of interest and the risk of overly prescriptive requirements.

The reaction follows the Department for Work and Pensions' (DWP) announcement of plans to develop a new trustee competency framework, strengthen master trust regulation and introduce mandatory minimum standards for pension administrators.

The proposals also include measures to improve member representation, manage conflicts of interest and provide greater oversight of professional corporate sole trustees (PCSTs), as pension schemes consolidate into fewer, larger arrangements.

Conflict of interest

Commenting on the proposals, Association of Consulting Actuaries (ACA) chair, Chintan Gandhi, warned that consolidation would place greater responsibility on a smaller number of trustees, making robust governance and independent challenge increasingly important.

"A world of fewer, larger pension schemes raises the stakes," he stated.

"When a relatively small number of people may ultimately influence the retirement outcomes of millions of savers, strong governance, visible independence and effective challenge – all underpinned by resilient administration – are essential for maintaining trust in the system."

Gandhi also called for greater regulatory scrutiny of potential conflicts of interest arising from professional trustee firms providing additional services to pension schemes.

"As professional trustee firms expand into wider services, it must be clear who is working for whom," he argued.

"Integrated models can bring efficiencies, but trustees, employers, members and the Regulator need to be able to see where potential conflicts of interest and concentrations of risk exist, and how they are being managed."

He reiterated the ACA's recommendation that The Pensions Regulator (TPR) should have greater visibility of connected services provided to individual pension schemes.

Trusteeship

Association of Professional Pension Trustees (APPT) co-chair, Julia Yates, welcomed the government's recognition of the strengths of the existing trusteeship system, particularly the flexibility it offers schemes to adopt governance arrangements appropriate to their circumstances.

"Professional trustees have an important role to play in this, through independent judgement, high standards of governance and a clear focus on members' interests," she said.

Yates stressed that any changes should build on existing good practice and deliver tangible benefits for members.

APPT co-chair, Christopher Wheeler, also highlighted the importance of preserving trustee independence and managing conflicts of interest as governance arrangements evolve.

"Trustees' fiduciary duties, alongside their wider statutory and regulatory responsibilities, provide a clear framework for ensuring that decisions are made in members' best interests," he noted.

Wheeler added that maintaining independence and effectively managing actual or perceived conflicts of interest were essential to sustaining confidence in the system.

The APPT also welcomed the government's recognition of the value of combining member and professional trustee expertise, arguing that reforms should preserve diversity of perspectives while supporting proportionate improvements in trustee capability.

The association highlighted the ongoing DWP consultation on trustees' fiduciary duties as another opportunity to clarify how existing legal responsibilities apply in practice.

Meanwhile, LawDeb trustee director and head of corporate sole trustee, Scott Pinder, cautioned against imposing prescriptive governance requirements that could restrict the range of trusteeship models available to schemes.

"There should be no argument about the destination. We all want pension schemes to have robust governance, strong challenge and decisions firmly focused on members," he said.

"The question is whether prescribing how schemes get there actually improves outcomes."

Pinder argued that board size should not be treated as a measure of governance effectiveness, stressing that different trusteeship structures could deliver appropriate oversight depending on a scheme's circumstances.

"Scale may justify greater scrutiny and stronger assurance, but board size should not become a proxy for effective governance," he added.

"What ultimately matters is capability, independence, member voice, resilience and the quality of the decisions being made."

He concluded that the government should "regulate the risk, not the label".

LCP partner, Steve Webb, also welcomed the review, highlighting the increasing complexity of trustee responsibilities across both defined benefit (DB) and defined contribution (DC) schemes.

Webb suggested that tighter requirements around transitions to sole trusteeship could provide an additional safeguard for members, while larger DC schemes may require stronger governance arrangements.

"On DC, our research has highlighted the growing demands on a very small group of trustees overseeing DC mega funds.

"There is a strong case for larger boards, providing greater diversity of thought and expertise, as well as for greater infrastructure to support trustees and protect their independence from the pension provider."

Association of Member Nominated Trustees (AMNT) co-chair, John Flynn, stressed that the reforms should preserve member representation as schemes grow larger and more removed from their memberships.

"A competency framework should raise the standard of the whole board, with the right training and support, rather than narrow who can serve on it. The member voice must be heard on every scheme and not just members panels."

Elsewhere, Hymans Robertson trustee governance lead, Hannah Clifford, welcomed the government's focus on collective board effectiveness, arguing that trustees' ability to work together was as important as their individual expertise.

She suggested the proposed principles-based approach should let trustee chairs assess governance arrangements based on their schemes' circumstances, including conflicts management, board culture and adviser oversight.

Brightwell CEO, Morten Nilsson, also emphasised the importance of proportionality: "Raising standards should not mean creating barriers that deter talented people from trusteeship.

"The strongest boards bring together professional expertise, specialist knowledge, member insight and diversity of thought. Reform should strengthen that model rather than narrow it."

Admin standards

The government's proposals to require pension administrators to register with TPR and meet mandatory minimum standards also received widespread support, although commentators warned the additional requirements could increase pressure on an already stretched sector.

Brightwell CEO, Morten Nilsson, described greater regulatory oversight of administrators as "long overdue", arguing the reforms could improve operational resilience and make it easier for schemes to change administration providers.

Independent Governance Group (IGG) head of policy and external affairs, Louise Davey, also welcomed the proposals.

"Administrators play a critical role in delivering member outcomes, yet trustees often remain accountable for services that are not directly under their control," she said.

"Minimum standards and registration with TPR will help improve consistency, operational resilience and accountability across the market."

However, LCP partner, David Fairs, warned that the reforms would create additional demands for administrators already managing significant workloads.

"These new statutory minimum standards will help drive more consistent service delivery across the industry to ensure that all members experience good levels of service and administration.

"But the requirements do add further to burden to administrators who are already busy with data cleanse exercises for the dashboard and risk transfer exercises and new requirements falling on DC arrangements such as VFM."

Meanwhile, Lumera commercial director, data and dashboards, Maurice Titley, argued that the reforms' success would depend on translating minimum standards into measurable improvements in data quality and administrative resilience.

"The objective should be to make consolidation safer and more efficient, rather than allowing poor legacy data and technology to become barriers to it," he said.

Titley also cautioned that the registration and supervisory framework would need to remain proportionate, ensuring that additional regulation delivered tangible improvements rather than becoming another compliance exercise.

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