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Premier research shows professional trustees essential for new regime
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Only 10% of Defined Contribution (DC) schemes have professional trustees
Premier, the corporate benefits and wealth management firm, has found that only one in ten Defined Contribution (DC) schemes have appointed professional trustees, as opposed to a quarter of Defined Benefit (DB) schemes.
Premier’s survey, carried out amongst HR and pensions professionals throughout the UK, revealed the importance of employing professional trustees: those with professional trustees reported significantly higher stakeholder satisfaction, improved de-risking, and a higher likelihood of meeting the Regulator’s DC governance principles.
The results suggest that, with the more onerous responsibilities and increased Regulator scrutiny of DC schemes, the number of professional trustees employed by DC schemes is likely to rise significantly.
John Reeve, Senior Consultant at Premier, said: “The new flexibility and complexity of DC schemes means that schemes need the expertise of professional trustees. Our experience has shown the additional costs of appointing professional trustees are more than offset in improved governance and cost savings elsewhere.
“While DB schemes have long recognised the importance of professional trustees, companies must wake up quickly to using professional trustees in DC schemes.”
The survey also showed that satisfaction with DB schemes fared higher than DC schemes from members’ and trustees’ perspectives. Sponsor satisfaction was lowest overall, though the survey indicates that further derisking would improve this score. Unsurprisingly, sponsors rated DC schemes preferable to DB arrangements.
Reeve continued: “It will be interesting to see if DB arrangements retain their position as the members’ scheme of choice once they begin to realise that the new pension freedoms do not apply to them. The fact that trustees prefer DB arrangements is perhaps an indication that the Regulator’s guidance is putting additional pressure on the role of Trustees in these schemes.”
The first Premier Pensions Survey is available to download here
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