The pensions landscape is changing. The transition from Defined Benefit (DB) to Defined Contribution (DC) is well underway. The DC market itself is transitioning to a more mature structure, characterised by bigger schemes. Change is also being accelerated by the Pension Schemes Bill currently before Parliament.

Amidst this change, one thing remains constant: the importance of good governance, with schemes overseen by trustees that have not only the skills and knowledge to navigate the changes to come, but also members best interests consistently front of mind.

This consultation takes stock of our trustee and pension administration landscape. It invites views on the issues confronting trustees amidst these transitions and where changes might be valuable. I look forward to hearing from trustees themselves, but also scheme members, managers and administrators.

Thank you for taking the time to contribute.

Minister for Pensions

Torsten Bell

Introduction

Trustees matter. Trusteeship is a vocation, and the Government is grateful to trustees for the hard work and diligence they show when making decisions on behalf of pension scheme savers and members.

Trustees have a pivotal role in the pensions system and are responsible for ensuring the financial security and retirement outcomes for millions of pension savers. The Pension Schemes Bill 2025^{[footnote 1]} will transform the UK pensions landscape; and, as the system changes, it is important that trusteeship, governance and levels of regulatory oversight evolve and change too. Our vision for the pension market is that a smaller number of bigger and better pension schemes are overseen by highly skilled trustees operating independently, applying good governance, and focussed on delivering the best outcomes for savers without risk of conflicts of interest.

The conclusions of the recent Pension Investment Review and the measures in the Pension Schemes Bill represents a package of substantial reforms and the full effects of some of the biggest changes, such as the introduction of DC Megafunds, will not take effect until 2030. At a time of fundamental change, it is important to “take stock” and examine the current strengths and weaknesses of the existing structures and regulatory frameworks that underpin the system of trusteeship governance so that we continually learn as we look forward.

With a varied array of Defined Benefit (DB), Defined Contribution (DC), DB Superfunds and Collective Defined Contribution (CDC) pension schemes operating, we recognise the issues facing trustees vary significantly depending on the size and type of scheme. Different segments of the market may need different solutions. This consultation seeks to explore what the upcoming changes means for trustees in different areas of the pension system and how trusteeship and governance can evolve to deliver the best outcome for savers. It seeks to build the evidence base and improve understanding of the issues facing trustees, identify potential risks and future challenges, and establish what systemic or regulatory changes may be needed. The consultation puts forward proposals in the following areas:

• increasing the knowledge and understanding requirements for trustees, with centrally set standards and accreditation for professionals; and
• measures to improve the diversity of trust boards.

In the UK, the trustees of trust-based pension schemes safeguard retirement savings for over 40 million members^{[footnote 2]}, with responsibility for managing around £1.5 trillion of assets. The trust-based pension system envisages that people, whether they are engaged in their pension or more often not, have skilled and experienced trustees looking after their interests. Trust-based pensions law places fiduciary duties on trustees that include the foundational safeguard that trustees always act in the best interests of the scheme’s beneficiaries by carrying out the purpose of the trust. The UK workplace pension funds market is one of the biggest in the world and plays an important part in the success of the UK economy^{[footnote 3]}.

So, it is crucial that UK pension scheme trustees, responsible for the investments of millions of savers, act as effective stewards with a real interest in the allocation, management and supervision of the companies they invest in.

In addition, the Government has announced its commitment to produce guidance to trust-based private pension schemes, aimed at clarifying how they can interpret and apply their fiduciary duties when considering wider factors, including systemic risks (such as climate risk) and members’ standards of living in investment decisions.

Alongside trusteeship and governance, good administration is at the heart of every well-run pension scheme. Whilst trustees can delegate work to an administration company, they cannot delegate their overall responsibility and fiduciary duty to their administrators. New policy initiatives such as Pensions Dashboards and the Value for Money (VfM) Framework put the importance of good pension scheme administration back in the spotlight and place new responsibilities on trustees and administrators. This means trustees will be responsible for procuring a wider range of services, negotiating and managing new contracts and holding providers to account. That is why driving up standards of governance and administration in pension schemes is central to our work and vital to help ensure savers receive not just the pensions they are due, but also a good customer service.

This consultation additionally asks about how we can ensure appropriate standards for pension scheme administrators are in place and enforced.

In DC pensions, we are legislating for fewer, bigger, better run schemes which have the scale to help deliver better outcomes for members. The Pension Schemes Bill also gives trustees new responsibilities to offer retirement solutions to DC savers and will require them to act following a VfM assessment.

In DB pensions, new consolidation models are launching, reflective of the changed funding reality schemes face, and professional firms have an increasing role in the governance landscape. Trustees of DB schemes also have new options to consider as different end game solutions enter the market. Surplus release changes create new opportunities and pressures for trustees – it gives them more flexibility to negotiate benefits for both employers to use for investment in business, and to benefit members, for example on pre-97 indexation. Trustees will be making active decisions on these areas with the right considerations and governance.

Strengthened governance requirements must also be proportionate to create better saver outcomes. Effective regulation provides important protections, but excessive regulation and oversight undermine these benefits – inhibiting growth, innovation and investment. In March 2025, the Government committed to cutting the administrative burden of regulation by 25% by the end of the Parliament. We will continue to work with the Pensions Regulator (TPR), as they deliver their commitments to support growth, including reviewing areas where unnecessary burdens on schemes can be reduced.

About this consultation

Who this consultation is aimed at:

Everyone, but we would particularly welcome responses from:

• Pension scheme trustees
• Pension scheme managers and service providers, other industry bodies and professionals
• Pension scheme members
• Groups representing pension scheme members
• Pension scheme administrators

Purpose of the consultation

The aim of this consultation is to identify measures that can raise the standards of trusteeship, governance and administration of trust-based workplace pension schemes. New measures in the Pension Schemes Bill such as surplus release, Megafunds, DB Superfunds, Guided Retirement and VfM introduce new and potentially significant decision points for trustees. Trustees need to continue to be equipped with the necessary skills to make those decisions that can significantly impact saver outcomes.

This consultation builds on “The pension trustee skills, capability, and culture” Call for Evidence^{[footnote 4]} that DWP ran between 11 July 2023 and 5 September 2023 and the previous government’s response published on 22 November 2023. It also reflects the Government’s response to the Work and Pensions Select Committee’s DB Pensions Schemes inquiry^{[footnote 5]} published on 30 April 2025^{[footnote 6]}. As a result of this work, the government has committed to publicly consulting on measures to support TPR in ensuring trusteeship evolves alongside the pensions system.

Scope of consultation

This consultation applies to England, Wales and Scotland. Pensions are devolved to Northern Ireland.

The consultation will build on the skills and capabilities required for all trustees to effectively govern schemes in a more complex and data-driven environment.

It will seek views on extending TPR’s remit to cover pension administrators, additional  support for lay trustees, managing conflicts of interest and how we ensure consistent standards across professional trustees.

Duration of the consultation

The consultation period begins on 15 December 2025 and runs until 6 March 2026.

How to respond to this consultation

Please send your consultation responses via email to DWP’s TPR powers policy team at the following email address:

privatepensions.trusteeshipgovernanceconsult@DWP.GOV.UK

If you would prefer to leave feedback anonymously you can do this via our web form which does not collate any personal information that could identify you, other than that you want to share. This is to ensure participants can share their views openly and without attribution. The following link will take you to the form:

Governance and Trusteeship Consultation – Fill in form

Government response

We will aim to publish the government response to the consultation on GOV.UK.

How we consult

Consultation principles

This consultation is being conducted in line with the revised Cabinet Office consultation principles published in January 2016. These principles give clear guidance to government departments on conducting consultations.

Feedback on the consultation process

We value your feedback on how well we consult.  If you have any comments about the consultation process (as opposed to comments about the issues which are the subject of the consultation), please email them to the DWP Consultation Coordinator. These could include if you feel that the consultation does not adhere to the values expressed in the consultation principles or that the process could be improved.

Freedom of information

The information you send us may need to be passed to colleagues within the Department for Work and Pensions, published in a summary of responses received and referred to in the published consultation report.

All information contained in your response, including personal information, may be subject to publication or disclosure if requested under the Freedom of Information Act 2000. By providing personal information for the purposes of the public consultation exercise, it is understood that you consent to its disclosure and publication. If this is not the case, you should limit any personal information provided or remove it completely. If you want the information in your response to the consultation to be kept confidential, you should explain why as part of your response, although we cannot guarantee to do this.

To find out more about the general principles of Freedom of Information and how it is applied within DWP, please contact the Central Freedom of Information Team: Email: freedom-of-information-request@dwp.gov.uk

The Central Freedom of Information team cannot advise on specific consultation exercises, only on Freedom of Information issues. Read more information about the Freedom of Information Act.

Chapter One: Good Governance

Importance of good governance

1. Good governance in the form of knowledgeable and engaged trustee boards is becoming ever more important in the complex regulatory, commercial, economic, and social environment pension schemes must operate in. It is key to delivering better retirement outcomes and greater security for members, ensuring regulatory compliance, and effective risk management strategies.

2. The need for good trustee decision making in delivering retirement outcomes is growing and this will continue given the significant changes to the pension landscape being introduced in the Pension Schemes Bill. This consultation seeks to explore ways we can strengthen trust-based governance arrangements and regulatory requirements.

3. The issues facing trustees are many and varied and differ depending on the type of scheme, the individual scheme rules and the segment of the market they are in. Whilst these challenges may differ, the fundamental principles of good governance are common and well understood. The expectations of the governing bodies for pension schemes are set out in trust law, legislation, individual scheme rules and TPR’s General Code of Practice.

4. With a more consolidated market there will inevitably be a move away from the traditional lay trustee board. The market is evolving away from small schemes with a single sponsoring employer. This has meant that professional trustee arrangements have become more prevalent over the last five years, increasing the potential for conflicts of interest and preferential treatment for inhouse services. Most Master Trusts operate a double trustee and executive board which oversees the Master Trust, regardless of the number of participating employers. DB superfunds or commercial consolidators will be managed by a trustee board but will no longer have a link to the employer.

5. Under the UK’s trust-based pension system, trustee duties provide important protections for pension scheme members and beneficiaries.  However, with fewer, larger pension schemes, and changes to the pensions market, it is vital that we continue to strengthen scheme governance. As the Single Employer Trust market continues to decline, the remaining trustees overseeing these schemes will also need support and new skills, not least to handle their new responsibilities to partner with firms offering default retirement pension plans.

Raising the bar

6. Trustees are committed to a role which, on occasion, can be difficult. We know from responses to the 2023 Call for Evidence that the majority of trustees are well-supported, knowledgeable, and hard-working. However, the responses also revealed that trustees would like more support to help them develop the skills, knowledge and capabilities to operate in a changing and increasingly complex environment. Governance standards need to reflect the future growth and increased complexity of larger schemes that have an increasingly important role in the UK and for financial stability.

7. Independent surveys of trust-based DB and DC pension schemes, conducted on behalf of TPR, have consistently shown that larger schemes have higher standards of governance and in particular investment governance. The 2025 survey of DC trust-based schemes found the knowledge and skills of the trustee board in relation to diversified investments was rated higher among larger schemes. Almost 2 in 10 micro schemes and 1 in 10 small schemes were rated as poor, whereas almost all large schemes and all Master Trusts were rated as good^{[footnote 7]}. The report of the 2025 DB trust-based scheme survey showed that around half of trustee boards among small/micro schemes were felt to have good knowledge and skills in relation to climate-related risks and opportunities, rising to 9 in 10 among large schemes^{[footnote 8]}.

8. Most large DB schemes and Master Trusts are well run, and their pension savers reap the rewards from this. We believe all savers should be in well-run, well governed pension schemes regardless of type. In the DC market the government’s position is clear: smaller schemes should look to consolidate where it is clear their governance and performance cannot match the biggest and best schemes in the market.

9. We want savers to have confidence that trustees have the requisite skills needed to manage their pension scheme effectively. We believe there should be a higher bar that all trustees must meet with regard to technical knowledge and understanding requirements, along with other skills, such as those linked to effective leadership. We also want to explore what other requirements could help trustees deliver on their accountabilities and ensure trustees are able to hold service providers to account. We therefore would like to explore options that can help drive up standards across all levels of trusteeship.

10. Given the risk landscape for pensions is changing with new opportunities for DB schemes, a rapidly consolidating mass DC market and a shrinking Single Employer Trust sector, we want to consider and gather feedback on what challenges this creates for trustees operating in different areas of the market.

Governance of Megafunds

11. DC Master Trusts emerged as a driving force in the market with automatic enrolment and the market expanded exponentially before authorisation was introduced. These schemes were required to be authorised and meet higher standards from 2018, and the introduction of that regime saw huge consolidation, a pattern that has continued at a slower rate since. We expect to see further consolidation following the introduction of the Pension Schemes Bill’s requirement that multi-employer DC schemes have £25 billion of assets by 2030 or are on track to do so by 2035.

12. The governance and trustee model in Master Trusts is markedly different from a single employer Defined Contribution trust scheme. In a single employer scheme the employer is likely to appoint the trustees and have representatives on the board and there is the potential for a direct member voice.

13. However, in many commercial Master Trusts there is little or no employer involvement in appointments to trustee boards, which are primarily made up of professionals who are appointed by the founder or scheme funder. The scheme funder may be part of the provider of the Master Trust who in turn may provide services to the scheme. This could create a potential conflict of interest where trustees’ loyalty to the Master Trust who employs them could lead to decisions being made that are not always in savers’ best interests.

14. We would like to understand the extent to which the relationship between the trustees and those that appoint and can remove them may cause conflict, and the extent to which trustees may not be fully able to act independently or provide sufficient challenge.

The role of Professional Trustees and Sole Trustees in governance

15. Professional trustees are playing an increasingly central role in ensuring that trust-based pension schemes are well governed. Schemes’ increasing complexity and maturity are key drivers for the rise in the use of professional trustees^{[footnote 9]}. Industry research shows around 39% of DC and DB schemes had a professional trustee in 2021; this has now risen to more than half (53%) in 2025^{[footnote 10]}.

16. Among DB/Hybrid schemes, professional trustee appointments are increasingly within a small number of firms. Over 50% of new professional trustee appointments went to 4 firms since June 2024^{[footnote 11]} and the 10 largest firms were accountable for the management of over 2,400 pension schemes with assets over £1 trillion^{[footnote 12]}. On current trends, these largest firms could be accountable for the management of around 2 in 3 DB pension schemes in the next five years^{[footnote 13]}.

17. In the case of DC schemes, it is the larger single employer trusts and multi-employer DC schemes which are most likely to appoint professional trustees. Based on TPR’s 2025 DC Schemes Survey over 90% of Master Trusts had a professional trustee compared with 49% of larger schemes, 49% of medium schemes, 34% of small and 10% of micro schemes^{[footnote 14]}.

18. A professional trustee can bring valuable knowledge and expertise to trustee boards. Industry reports say that key drivers for appointing a professional trustee were to support with endgame journey plans, bring specialist expertise or address difficulties with finding trustees.

19. TPR surveys have shown in many areas of governance and administration, particularly for smaller schemes, schemes with professional trustees reported higher standards than those without. For DC schemes with under £100 million in assets this was particularly the case around assessing value for members and trustee capabilities around productive investments and environmental, social and governance (ESG) compliance. Although having a professional trustee was found to make little difference in larger DC schemes, the survey found a positive impact on scheme governance among micro and small schemes relative to those that did not have a professional trustee^{[footnote 15]}. In addition, 93% of schemes reported the trustee board had good knowledge and skills to consider a diversified range of investments when they had a professional trustee compared to 43% for schemes without^{[footnote 16]}.

20. TPR is already engaging directly with the largest professional trustee firms in the market to gain some understanding of key issues such as the choice of a Professional Corporate Sole Trustee (PCST) for a scheme and obtain a greater market oversight.

21. Professional trustees bring many benefits to pension scheme governance as described above. However, there are some inherent risks particularly around conflicts of interest which we discuss below.

Provision of other services

22. Whilst many are reporting the pace of growth slowing in the market for professional trustees, the scope of services provided by professional trustee firms is arguably growing. This includes appointments outside typical DB boards – e.g. DC Master Trusts and Independent Governance Committees, DB superfunds and CDC schemes. Many of the professional trustee companies additionally offer secretarial and governance services, with some also offering wider services such as administration, investment oversight and endgame services.

23. Within recent research, of the 18 professional trustee firms surveyed by LCP only five firms focus exclusively on core trustee services. The majority of professional trustee firms (13) provide services that go wider than just core-trusteeship such as in-house administration^{[footnote 17]}. This can be positive for trustees, particularly for small schemes as it can offer an efficient and cost-effective way of running the scheme. There are also potential conflicts in the provision of further services if due process isn’t followed in the appointment and monitoring of service providers.

24. There are requirements for trustees under TPR’s General Code of Practice in appointing and managing advisers and service providers. In addition, all trustees are required to manage conflicts of interest. Additionally, within DC trust schemes, trustees will have to demonstrate that they have met the new VfM requirements when making appointments for the provision of other services, which supports the transparency of decision-making where further in-house services are provided.

25. We would like to explore whether there are further requirements that are needed in relation to the selection and management of advisers and service provider by professional trustees.

Multiple Appointments

26. There may be concerns that trustees appointed to multiple boards may have less time to dedicate to their schemes. In a survey by TPR, a quarter of respondents reported representing multiple schemes. However, this varied widely by role and was more likely among professional (68%) and corporate (45%) trustees than non-professional trustees (15%)^{[footnote 18]}. Schemes vary in many ways, including the complexity of decisions being taken at any time, and the time taken to oversee a scheme effectively. It is also recognised that professional trustee companies often operate a model where more than one trustee director is appointed to each scheme and there is usually a wider team supporting those individuals.

27. There could be difficulties if individual trustees hold a large number of appointments, for example when unforeseen market activity requires urgent action. In those circumstances trustees may not have the capacity to react effectively and quickly across numerous schemes and ensure that all schemes receive the same high standard of decision making in a timely manner. However, operating across multiple schemes may be beneficial for sharing good practice and trustees can sometimes draw on a wider network of employed staff including governance specialists to support their role in managing a scheme.

Professional Corporate Sole Trustees (PCSTs)

28. The increase in professional trustees has been more pronounced for PCST appointments (sole trustees acting as part of a professional firm). The proportion of schemes with a PCST arrangement has doubled since 2021^{[footnote 19]}, with around 20% of DB schemes having appointed a professional trustee as a PCST^{[footnote 20]}.

29. The change has been driven by cost, quicker decision making, addressing difficulties with finding trustees and succession planning, and having a particular project that requires expertise, e.g. managing transition to buy out successfully.

30. PCST arrangements can pose different risks to members of both DB and DC schemes, and this is an area which may benefit from greater scrutiny. Most sole trustee appointments are at the smaller end of the market. Around 40% of appointments are for schemes with fewer than 100 members^{[footnote 21]}. For DB schemes, there has also been an increase in the number of PCST appointments to larger schemes although it is still a small proportion of all PCST appointments^{[footnote 22]}. There is also the potential for a PCST to provide trustee services to different types of pension schemes (DB, DC and CDC). We’d like to understand whether it is realistic that a PCST team or one professional trustee company would have sufficient expertise across all types of pension schemes or whether it would be in savers best interests to have particular scheme specialists.

31. TPR research has demonstrated that there are different models operating for PCST appointments within professional trustee companies; however, the Association of Professional Pension Trustees (APPT)’s revised code for PCSTs^{[footnote 23]} stipulates that where there is a PCST in place, at least two individuals employed by the professional trustee firm should be making decisions together. It goes on to say that “PCST firms must maintain an independence policy which ensures that the PCST representing the firm is and remains independent of the sponsoring employer.” All APPT members have voluntarily signed up to this code.

32. The risks of conflicts of interest are more pronounced where there is a PCST because decision making is in fewer hands and there might be a lack of checks and balances and diversity of thought. There is also a risk that members’ views will not be taken into account when making decisions.

33. In some DB schemes, there are concerns that employers are putting PCST arrangements in place at short notice. This can mean there is not sufficient opportunity for a full transfer of knowledge between the existing trustee board and the new PCST. However, the APPT Code of Practice for Professional Corporate Sole Trustees states a PCST must “ensure its ability to act as a trustee in the best interests of the members is not fettered by any action prior to its appointment as trustee”.

34. PCST arrangements can make a valuable contribution to scheme governance particularly in schemes where particular skills and/or a more streamlined decision-making approach would be beneficial, for example DB schemes heading towards buy out or DC schemes winding up. However, some PCST governance models may not be suitable for all schemes, and we wish to consider whether restrictions are needed in some circumstances.

Chapter Two: Trustees and their appointment

Appointment and replacement of trustees

35. Appointing a pension scheme trustee is a significant and important decision. Appointing good, knowledgeable trustees are key to the success of a scheme, its security and effective running. Making the wrong choice can lead to mismanagement, legal disputes, and ultimately poor performance and poor saver outcomes.

36. Pension schemes’ rules have different provisions for the appointment of trustees to the governing body. TPR’s General Code of Practice is clear that trustees and scheme managers should have processes in place to exercise any powers they have in this regard. However, it also recognises that many schemes will have governing bodies where appointments are made by the sponsoring employer or in accordance with scheme-specific legislation.

37. It is clear that the way in which members of a governing body are selected can have a direct impact on the effectiveness of the body, e.g. undertaking a skills assessment will ensure that appointments can complete the balance of skills needed across the board.

38. Within DC Master Trusts, all trustees are required to be assessed as being fit and proper as part of the authorisation regime. In the case of a DB superfund, each individual trustee is approved and can also be removed individually. Some governing bodies require at least one third of their trustees to be Member-Nominated trustees (MNTs). MNTs are also discussed in both paragraphs 73 – 76 and Chapter 4.

39. All trustees are required to act in line with their duties to scheme members, whether they are member-nominated, employer-appointed or appointed through other routes. Occasionally conflicts can arise, and there are clear requirements that these are managed.  When employers appoint pension trustees in employer sponsored DB and DC schemes, there can be concerns that decisions are made or perceived to be made that favour the employer, rather than members. However, we believe most trustees, including those nominated by employers, put their fiduciary duty to all beneficiaries first. TPR already has clear guidance and processes in its General Code of Practice for appointing members and the Chair to a governing body. Given the expected increase in market consolidation, we would like to understand if more safeguards are needed to ensure trustee boards remain focussed on delivering for scheme members.

40. There is a broad consensus across the pensions industry that diverse and inclusive pension boards are important for good governance, good decision-making and good member outcomes. 78% of respondents to TPR’s 2023 Trustee Diversity and Inclusion (D&I) Survey reported that they felt a diverse trustee board was important^{[footnote 24]}.

41. Yet, trustees are often less diverse than the general population. The same survey found trustees were less likely to be female, aged under 45, have a disability that limited their day-to-day activities, come from an ethnic minority background or of a non-Christian faith^{[footnote 25]}.

42. There are also concerns on the future supply, with industry research finding 85% of trustees may be planning to retire in the next 3 years^{[footnote 26]}.

43. We also know professional trustees are bringing more diversity to the trustee market. TPR’s Trustee D&I Survey^{[footnote 27]} found professional trustees tended to be younger than non-professional trustees (13% vs. 8% aged under 45) and were more likely to be female (29% vs. 23%), and from an ethnic minority background (8% vs. 4%). Whereas two-fifths of schemes with professional or corporate trustees had taken or planned action to create a more diverse trustee board (41%), or encourage greater inclusivity (42%), this fell to 24% and 25% respectively among schemes with only non-professional trustees.

44. As schemes grow in size, it becomes more important for trustee bodies to have a wide range of skills or understanding. The skills needed to manage schemes are transferable from a wide range of professional backgrounds such as management, financial, legal, cyber, and we want to encourage people with these skills to be trustees.

45. There are indications that the industry recognises this and there is already some industry good practice with graduate training programmes run by professional trustee firms. For example, in 2024 one professional trustee firm launched a 12-month graduate training programme to provide, on an annual basis, 6 participants with the skills, knowledge and experience required for a successful career as a professional trustee.

46. Another professional trustee firm found its 2024 trial graduate training programme so successful they expanded it in 2025. They have now appointed in London, Manchester and Glasgow with successful applicants not necessarily from the traditional law, accountancy and actuarial backgrounds.

47. Ensuring diversity of thought on trustee boards is a key pillar of good governance and we want to explore ways we can bring more diversity, talent and skills to trustee boards.

Is there a role for a Public (independent) Trustee?

48. Usually trust-based pensions schemes appoint their own trustees whose role is to be responsible for ensuring that the scheme is run properly. However, as mentioned in paragraph 36, there are also legislative provisions that may be relevant. E.g. in certain circumstances, TPR can remove and replace a trustee.

In these circumstances, TPR has three relevant legislative powers which can be used to remove or replace a trustee if it has serious concerns about a trustee. It can:

• Suspend an individual from acting as a trustee^{[footnote 28]};
• Prohibit an individual from acting as a trustee^{[footnote 29]}; or
• Appoint another trustee with exclusive powers, which effectively removes the previous trustees^{[footnote 30]}.

49. These powers can only be used in particular circumstances. E.g. TPR can only prohibit a person from being a trustee if it is satisfied that they are not a “fit and proper” person to act as a trustee. The processes are necessarily akin to a legal tribunal with a high standard of proof. The most serious intervention has rarely been used: in the last year, TPR has used the power to prohibit once and the power to suspend was not used at all. However, TPR can often achieve the ‘right outcome’ for a scheme earlier without using these powers, by choosing to influence and negotiate with trustees and the sponsoring employer to encourage them to do the right thing without regulatory action.

50. When replacing a trustee, TPR makes pension scheme trustee appointments from their independent register of trustees. The register is open to any trustee but the criteria for inclusion are demanding so, in practice, there are only a small number of professional trustee firms on it. This is an effective, albeit expensive solution for schemes in need of a trustees who can provide an important impartial view and effective governance.

51. In schemes where there are no trustees in place known as orphan schemes, TPR has a power to appoint a trustee from the independent register through a streamlined process without going to a Determinations Panel. TPR appoints a trustee from the independent register following an open tendering process.

52. TPR provides post-appointment monitoring of any trustees it has appointed and will scrutinise and challenge them on the fees they charge if necessary. There have been some isolated incidents where TPR has done so, but does not believe there is a widespread problem with trustee fees.

53. We would like to investigate alternatives to the current process of removing and replacing a trustee by TPR. Some other jurisdictions use a public trustee which is a government-appointed official who acts as a last resort trustee for estates and trusts. They step in when no one else is able to act. Public trustees could provide a secure independent alternative to help ensure the proper administration and protection of beneficiaries’ interests.

54. In addition, we would also like to explore the feasibility of introducing a public trustee to be used where a scheme’s trustees need to be replaced or when TPR is asked to appoint a trustee to an orphan scheme.

Trustee Directory

55. TPR are already working to improve the quality of data gathered through the scheme return which includes the information it holds on trustee boards. We are committed to working with the Regulator to ensure that TPR has a complete directory of trustees to use to support TPR’s subsequent interaction with all schemes. There is no intention for the registry to be published publicly.

56. We believe a trustee directory is a positive and practical way to engage with trustees. It will clarify if a trustee is a professional trustee or member-nominated, help to identify those who need specific support and flag up any schemes which may require targeted intervention. It will also enable TPR to check who is accredited, and levels of toolkit completion.

57. To achieve this, it will be necessary to establish a statutory definition of a professional trustee and find a way to identify individual trustees to avoid confusion within those who have similar names. We would also ask schemes or trustees to advise TPR if a trustee is a professional trustee, employer nominated, or member nominated. This could be achieved through a new requirement for all trustees to register individually with TPR, or by changing the requirements for schemes to supply trustee information on the scheme return to include information which will uniquely identify trustees such as a company number, National Insurance number or date of birth. The new requirements could follow the approach currently applied to DC Master Trust authorisation and any of the new requirements would need to work alongside those existing requirements.

58. We are seeking views on the most effective way to monitor and track trustees without significantly increasing the burden on TPR, schemes or trustees and a deliverable method of uniquely identifying individual trustees.

Chapter Three: Skills and knowledge

59. The skills and experience of pension scheme trustees are integral to a scheme’s success. The running of a DB, DB superfund, DC or CDC pension scheme in an increasingly complex world requires more than just financial expertise. It needs a knowledgeable trustee board with diverse skills, experiences, and strong governance capabilities.

60. Trustees in the modern world are being asked to develop additional skills and knowledge around sustainability, and private market investment. For example, the ability to understand complex markets and discuss wider factors with fund managers is becoming more prevalent and trustees need to be able to do this in order to set investment strategies which work in the best interests of members.

61. A well-functioning pension scheme trustee board not only ensures that savers are protected but also enhances governance and decision-making. To effectively manage a pension scheme, trustees need a blend of both technical knowledge and strong soft skills to ensure the board functions effectively as a whole.

62. The 2024 Work and Pensions Select Committee Defined Benefit Report and the 2023 independent review of the Pensions Regulator both recommended mandatory accreditation for professional trustees. This led to the Government’s publicly committing to consult on the issue.

63. We want to explore what additional requirements should be placed on professional trustees given the increasingly influential role they play in the UK pension system.

Accreditation for Professional trustees

64. As previously referenced, there has been a marked increase in schemes using the professional trustee model. Consequently, we want to explore what additional requirements should be placed on professional trustees given the increasingly influential role they play in the UK pension system.

65. All trustees have a statutory duty to acquire and maintain a required level of knowledge and understanding. This requirement can be met through TPR’s trustee toolkit. However, we know from the 2023 call for evidence that while most trustees meet this standard, some do not. This means that not all pension scheme trustees have the required skills, knowledge and understanding to operate in an increasingly complex environment. We would like to consider what the appropriate knowledge and understanding requirement should be for all trustees to ensure they are capable of overseeing the bigger pension schemes of the future.

66. This could go further than technical knowledge to include knowledge of leadership, negotiation, investment management, communications, financial planning etc. This could help ensure trustees oversee outsourced providers appropriately and give them the confidence to manage and challenge advisers.

67. Although accreditation is not currently mandatory most professional trustee firms now ensure trustee directors are accredited. TPR set out an expectation in their General Code of Practice that professional trustees should be accredited. A 2023 Survey on Trustee Diversity and Inclusion found that one in four trustees either had or were working towards accreditation; however, among professional trustees three in four trustees either had or were working towards accreditation^{[footnote 31]}.

68. The APPT and the Pensions Management Institute (PMI) both run accreditation schemes, with exams and professional development requirements. Both schemes require trustees who wish to be fully accredited sitting the PMI’s exams.

69. PMI offers a Certificate in Pension Trusteeship which is required for trustees seeking PMI accreditation. They also offer a Diploma in Pension Trusteeship which is a more advanced qualification designed to show judgement when dealing with complex pensions issues, above and beyond technical knowledge.

70. The APPT has set standards for professional trustees of occupational pension schemes which they expect all their members to adhere to. Their accreditation involves completion of both TPR’s trustee toolkit and PMI’s certificate of trusteeship in addition to meeting other criteria including passing a fit and proper test.

71. Given the important role professional trustees play and the complex issues they must deal with we believe savers would rightly expect those entrusted with their retirement savings to be held to the highest standards. We therefore propose increasing the requirements needed to be a professional trustee. We would like to explore whether Government and TPR should introduce higher requirements for professional trustees and set out on a statutory basis the standards they wish accredited trustees to meet and allow the industry to deliver those standards rather than the current system which allows the industry to self-regulate and decide what those standards should be.

72. We propose introducing higher requirements for professional trustees in addition to the knowledge and understanding requirements which all trustees must meet. We do not want to risk discouraging lay or independent trustees who could add value and diversity to a trustee board by imposing the same requirements on them, but this consultation also makes clear it is our intention to raise the standards and requirements of trusteeship across the board.

Support for lay trustees

73. Lay pension trustees are generally non-professional individuals who serve on a pension scheme trustee board. They generally do not hold professional pension qualifications and are not paid for their role although they generally receive expenses. They are normally appointed or nominated by the sponsoring employer or the scheme’s members, and they can bring important diversity and perspective to a board. These trustees are usually volunteers with a connection to the employer or scheme members, which enables them to provide unique insight into the views and needs of scheme members.

74. Small schemes governed only by lay trustees often do not meet the requirements expected of them and may require more support to fulfil their obligations. Surveys of DB and DC schemes carried out by TPR in 2024 found that smaller schemes were less likely to report having effective policies/procedures. Around half of DB schemes reported having “effective” or “effective and documented” policies and procedures in all of the areas covered by the survey^{[footnote 33]}, compared to one in five DC schemes. There was much variation among DC schemes with around 4 in 10 medium, large and Master Trust schemes reporting “effective” or “effective and documented” policies and procedures in all of the areas covered by the survey, compared to a quarter among small schemes and 15% among micro schemes^{[footnote 34]}. The likelihood of demonstrating all six of the VfM assessment elements generally increased in line with scheme size, ranging from all Master Trusts and 6 in 10 large DC schemes; to around 1 in 10 small schemes and 1 in 5 micro schemes^{[footnote 35]}.

75. We have previously committed to consult on ways we could better support all lay trustees to carry out their duties effectively. There is a wealth of support already available to lay trustees through the TPR’s website and also through outside organisations such as the PMI and the Association of Member Nominated Trustees (AMNT).

76. However, this information is not always as accessible to lay trustees as it might be. One option might be to create a “one stop” website geared towards lay trustees. This area could be used to signpost lay trustees to all the available resources such as the trustee toolkit and the external support which they can access.

Chapter Four: Member voice

77. Pensions are a significant part of worker’s pay and their future security in retirement. It is therefore important that the voice of the member is heard and considered in the governance of pension schemes. All trustees have a fiduciary duty to act in the interests of the scheme’s beneficiaries, but the views of members can bring an essential and sometimes different perspective to the decisions trustees make. This will become more important in the context of DC where trustees will be responsible for VfM quality of service metrics and default pension plans where member focussed designs will be more important.

78. The majority of trust-based schemes are required to have one-third of the members of the trustee board (or directors of a trustee company) nominated by members, although there are a number of exemptions (including for schemes that have a sole independent trustee, or where all the trustees are independent). MNTs can provide the diversity of thought and challenge to support the overall effectiveness of the board, which is a key pillar of good governance. They bring a different set of skills, perspectives and experiences to the trustee board from those provided by senior employer trustees and can reflect the voice of scheme members to the rest of the trustee board. The AMNT described MNTs as “providing the balance between employer and beneficiaries which comes from having a stake in the scheme.”^{[footnote 36]}

79. However, this picture is already changing. Around 30 DC Master Trusts now account for over 90% of memberships and 80% of assets in the DC trust market. Similarly, there are now less than 1 million active private-sector DB savers which breaks the link between the member (who may be retired or no longer work for the company) and the scheme.

80. All trustees have a duty to carry out the purpose of the trust and act in the interests of all beneficiaries rather than to act only as a representative of those who nominated them. It is important for MNTs to make decisions that take into account the interests of all members and beneficiaries not just the group they belong to (e.g. whose pensions are currently in payment).

81. Member involvement does not necessarily have to come only through MNTs. In the case of some schemes which are still open, employers must consult about certain changes to occupational or personal pension schemes beforehand^{[footnote 37]}. There are other methods schemes can use to canvass member voice. For example, the National Employment Savings Trust (NEST) with hundreds of thousands of participating employers has its member panel which allows them to take the views of members into account.

82. There are good practice examples too in large multi-employer DB schemes and DC Master Trusts of panels and other routes which ensure the views of members are taken into account in the decisions taken by trustees. In risk sharing and DC schemes, where more of the risk is borne by the member and trustees will be required to provide default pension plans, this becomes even more important.

83. MNTs may have better links back to the scheme membership than employers and be able to communicate clearly with colleagues about pensions, and take into account member interests and priorities in determining strategies for the pension scheme.

84. Where some traditional schemes have chosen to appoint an independent PCST, members and savers may perceive that this means that their voice is not being heard. This type of arrangement is exempt from the MNT requirements.  Members of several large schemes which have moved to a PCST gave evidence to this effect to the WPSC Defined Benefit enquiry in 2023^{[footnote 38]}.

85. As the industry moves towards fewer, larger DB and DC multi-employer schemes new challenges are posed to the traditional MNT model given the potential diversity and range of different employers in a large multi-employer scheme. Despite this it is important that the voices of members are still taken into account and represented and we would welcome views on how this can be achieved in a more consolidated market.

Chapter Five: Administration

86. Against a background of changing regulatory requirements, including for pension dashboards, strong administration and good data are integral to the effective running of a pension scheme and accurate payment of members’ pensions. The upcoming changes to the pension market and the increased levels of consolidation will put new demands and increased pressures on administrators and we want to understand if there are sufficient capacity and capabilities to deliver the changes needed to the required timescales safely and without creating additional risks.

87. The administrator’s role is central to the running of a pension scheme and will include processing contributions and making pension payments, managing and processing member data and transfers, monitoring and maintaining data quality and data security, and dealing with member enquiries. Administrators can be in-house (sometimes provided by the sponsoring employer), a contracted third party, or a combination of these. Some administrators may be based or have their headquarters overseas creating different operational and logistical risks. Some schemes may have administration services provided by their insurer or actuary, through a bundled arrangement.

88. Trustees remain ultimately responsible for how the scheme is run, but whilst they must oversee the administrator, they do not have day-to-day involvement. For most pension scheme members administrators are the face of the scheme with which they have most contact. TPR is responsible for regulating most occupational pension schemes: its remit includes the governance of trust-based pension schemes, but it does not cover the pension administrators that provide services to the trustees of pension schemes.

89. Poor administration can have a significant effect on both individuals and the scheme as a whole, and one or both could incur financial loss as a result. High-quality pension scheme administration is therefore critical to building and maintaining faith in pension saving and trust in the pension system. The VfM framework for DC schemes will assess quality of service metrics and we expect trustees to drive continuous improvements by holding administrators to account for their performance and service standards. TPR has recently published revised guidance^{[footnote 39]} to assist trustees to administer their schemes in line with the scheme rules and law.

90. However, there are no minimum standards for those administering pension schemes. The Pension Administration Standards Association (PASA) offers voluntary accreditation to association members who could be administrators or schemes. There are around 80 PASA members^{[footnote 40]} and at the time of writing 10 TPA’s and 4 in-house administrators have chosen to be accredited. The PASA standards provide best practice standards for the industry rather than minimum standards that administrators must follow. TPR has set out that it would support industry standardisation, such as adherence to the PASA’s Code of Conduct on Administration Provider Transfers. PMI also offers a qualification to equip individuals with the technical and practical skills needed for administering pension schemes, although this is not mandated.

91. In 2024, TPR launched a voluntary engagement initiative with different types of DB and DC pensions administrator. This aimed to identify the risks and challenges that administrators face and understand how they can support improved outcomes for savers. The review found that pension administration is improving, with many administrators becoming more resilient and strategic. However, there are still challenges – especially around changes to regulatory requirements, technology, staffing, data, and cyber security^{[footnote 41]}.

92. In some cases, administration for trust-based workplace pension schemes is undertaken by providers delivering services for FCA regulated businesses. In these cases, the administration firm itself may be subject to FCA regulation, depending on the services they provide for the regulated business (and the FCA rules applicable will also depend on the specific arrangement). However, this is not always clear cut and there may be some regulatory gaps where neither TPR nor the FCA would have the powers they need to act against an administration service provider. With the transition to Megafunds in 2030, we want to ensure there’s parity of regulatory oversight for those providing administrative services to both the contract and trust-based sides of the market so that savers are afforded similar levels of protection.

93. The independent review of TPR conducted in early 2023 recommended DWP and TPR should consider whether pension scheme administrators should be regulated by TPR and we are seeking feedback on this issue. One approach might be a power to set scheme standards that trustees would need to ensure were met. Direct regulation of administrators would be an alternative approach. We also are aware that Integrated Service Providers (ISPs) are currently being used as intermediaries by most pension schemes to connect to the pension dashboard. ISPs can reduce costs and complexity for schemes that lack in-house technical capability and expertise. Given their integral role in supporting trustees to meet the dashboards obligations we would like to explore if ISPs should also be included in any future regulatory measures for administrative services.

Data

94. Many of the potential barriers mentioned above are caused by data issues. For example, TPR’s recent Data quality regulatory initiative shows that not all TPAs test and measure the quality of member data in a consistent way.

95. Another concern regarding data is that not all scheme data is digitised. TPR’s Dashboard readiness survey found that 25% of schemes held some sort of DC and / or DB value data that was not available digitally. Larger schemes are typically better at digitalisation: 96% of very large schemes held the data needed to match a member for pensions dashboards purposes digitally for all members.

96. We believe this will improve over time because outside factors are influencing the market. All administrators will have to accept that investment in digitisation is necessary if their business is to compete. There is a risk this could lead to good administration costing more, at least in the short term but digitalisation should enable trustees and administrators to provide a better service to their members.

97. Landscape changes mean trustees have had to focus on the quality and digitalisation of data over the past few years. Driving factors include DB scheme funding levels are high which is encouraging many to seek buy out; Guaranteed Minimum Pension correction exercises; and pension dashboards.  TPR’s 2023 to 2024 survey of pension scheme administrators showed that two-thirds of trustee boards had engaged with administrators on data quality over the previous 12 months^{[footnote 42]}.

98. GMP equalisation and dashboard requirements have driven trustees to focus on some administration services, but the focus is very much requirement driven. TPR engagement with schemes indicates that trustees’ focus on data remains very much driven by specific ‘projects’ such as implementing dashboards, rectification (GMP equalisation/McCloud) or derisking (e.g. a DB scheme preparing for buy out).

 

 

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