The global pandemic and the associated volatility in financial markets, together with increased attention from the Pensions Regulator (TPR), has put more pressure on pension scheme trustees than ever before.
Yet PwC has found that schemes typically pay less for trustees than for their actuarial and legal advisers, and in some cases less than their secretarial support. This is despite having responsibility for managing the challenges, risks and complexities associated with the £2 trillion of defined benefit pension liabilities in the UK.
PwC’s Trustee Pay Survey shows that, on average, the chair of a trustee board is paid £54,000 a year. This is around 5% of the total annual cost of managing a typical DB pension scheme (excluding investment costs), and is less than 25% of the average pay of the chair of a major company board. The average pay of a trustee who is not a board chair, but is likely to have additional responsibilities such as chairing a sub-committee, is £30,000 a year, the survey of 112 schemes shows.
Trustee time commitment has also steadily increased over the last decade, from an average of 17 days a year in 2010 to 26 days in 2020. Most of this time is spent performing trustee duties outside of regular meetings. This is often outside of normal working hours for company appointed trustees who are still in employment.
Peter Sparshott, head of pensions management consulting at PwC, said: “Huge additional pressure has been placed on trustees over the past year to preserve the continuity of service to members. With a number of new requirements underway or in the pipeline, such as benefit equalisation and pensions dashboards, we are expecting trustees to be busier than ever. At the end of such a difficult year and with no easement in sight, it is perhaps a good time to reflect on whether trustees are adequately rewarded for taking on this ever-growing list of responsibilities and challenges.”
PwC has also found that women tend to be under-represented on trustee boards (24%), and particularly as chair of a trustee board (17%). However, average pay for women in chairing roles tends to be higher than their male equivalents.
Saye Mkangama, PwC pensions partner, added: “It’s clear that many trustee boards are not currently representative of the diverse membership they are serving. Representation is important because it has been reported that the gender pensions gap in the UK could be 40% and the ethnicity pensions gap could be 25%. Improved representation on trustee boards, and pensions industry leadership in general, will allow the development of better pension policies, products and options. They can be more tailored to diverse individual needs. Other channels can be created for savers to access the pensions information that they need.”
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