Professional trustee appointments grew by 11 per cent in the past year, while growth for corporate sole trustee appointments was even higher at 14 per cent, research from WTW has revealed.

The 2024 Professional Trustee Survey, which covered 15 of the largest professional trustee firms, revealed that defined benefits (DB) pension schemes are at a tipping point in the UK, where half now have a professional trustee.

In addition to this, almost half (48 per cent) of all professional trustee appointments are now corporate sole trustees, where one firm of professional trustees take full responsibility for a pension scheme’s trustee board.

The remainder of professional trustee appointments are for trustee chairs (27 per cent) and co-trustees (25 per cent).

Scheme size was found to be a big factor in the type of professional trustee that is appointed, as the corporate sole trustee model is growing especially among the smaller schemes (less than £25m in assets), making up around three-quarters (73 per cent) of all professional trustee appointments.

WTW found that professional trustee firms have also been recruiting heavily in order to keep up with current demand for services, and to make sure they have the capacity needed to meet further anticipated growth in the coming years.

Indeed, the survey found that there are more than 380 professional trustees operating in the UK market, a 15 per cent increase in the past year, although this varied significantly between firms.

It also found that, due to the high growth in appointments and recruitment, professional trustee firms are selecting talent from a wider variety of backgrounds and experiences than has traditionally been the case for pension scheme trustees.

Whilst actuaries and pension consultants are still the most popular backgrounds to recruit from (29 per cent), those with HR (21 per cent), finance (13 per cent) legal (13 per cent), investment (13 per cent) and covenant (3 per cent) backgrounds are increasingly sought after.

The growth in the professional trustee industry has also had an impact on the diveristy in the industry.

In particular, WTW found that, currently, 42 per cent of professional trustees are female, compared to 28 per cent of the overall trustee population.

Meanwhile, the ethnic make-up of professional trustees is 91 per cent white, compared with 96 per cent of trustees overall, and is closer to the overall UK population.

The median age of professional trustees was 51, compared with 61 for trustees overall and 41 for the general population.

Commenting on the findings, WTW senior director, Richard Campbell, said: "The growth in professional trustee appointments across all areas has continued at an impressive rate underscoring a pivotal shift in pension scheme governance.

“This trend reflects the increased trust and reliability that employers place in professional governance to help navigate the complex pensions landscape and address governance challenges in an efficient way.

“Professional trustees bring a wealth of expertise to pension scheme governance. With backgrounds spanning a number of relevant disciplines, there has never been such a range of expertise on offer."

Campbell also predicted further growth in the professional trustee market in future.

"This is further supported by endorsements from the Department for Work and Pensions and The Pensions Regulator (including the regulator's May 2024 Corporate Plan) highlighting the important role professional trustees play in upholding high standards of governance, which is more crucial than ever in today's regulatory environment," he said.

---