The world of pension schemes is complex and highly regulated, requiring expert oversight to ensure that members’ benefits are safeguarded and that the scheme operates in compliance with the law. As pension schemes become increasingly sophisticated and the regulatory environment more stringent, the role of Independent Professional Trustees has gained prominence. These professionals bring a wealth of knowledge and experience to the management of pension schemes, helping to navigate the challenges that arise and adding significant value to the trustee board. But who exactly are Independent Professional Trustees, and what unique advantages do they offer?
Who Can Be an Independent Professional Trustee?
An Independent Professional Trustee is someone who serves on the board of a pension scheme without any direct ties to the sponsoring employer, ensuring that they can offer unbiased and objective advice. While the job title might seem self-explanatory, the role demands a deep understanding of the pension landscape and the ability to manage complex responsibilities effectively.
Typically, Independent Professional Trustees come from a variety of backgrounds within the pensions industry. They may have previously worked as pension scheme actuaries, lawyers, HR experts, or covenant advisers. This broad range of experience allows them to bring a well-rounded perspective to the trustee board, contributing expertise in areas such as risk management, compliance, and strategic planning.
In addition to industry experience, successful Independent Professional Trustees possess strong communication skills, organisational abilities, and the capability to manage the intricate dynamics of running a pension scheme. They must coordinate with various stakeholders—including scheme members, the sponsoring employer, regulatory bodies, and other trustees—to ensure that the scheme operates smoothly and meets its long-term objectives.
Should You Employ an Independent Professional Trustee?
The decision to bring an Independent Professional Trustee on board involves weighing several factors. The most obvious benefit is the specialised expertise they bring, which can be invaluable in managing the complexities of a pension scheme. Their involvement reassures the trustee board, the employer, scheme members, and regulatory authorities that the scheme is being managed in accordance with best practices and regulatory requirements.
Moreover, an Independent Professional Trustee can help free up internal resources by taking on the heavy lifting associated with scheme management. This allows the sponsoring employer to focus on its core business operations, confident that the pension scheme is in capable hands.
However, there are potential disadvantages to consider as well. The additional cost of employing an Independent Professional Trustee must be balanced against the benefits of enhanced scheme management and risk reduction. Furthermore, there is sometimes concern that bringing in a professional trustee could lead to a loss of operational control for the employer, particularly if the trustee advocates for increased governance measures or additional professional advice, such as independent covenant assessments or legal input.
That said, a good Independent Professional Trustee will work collaboratively and proportionately, ensuring that any additional spend is justified and aligned with the scheme’s objectives. Their greater knowledge and experience often lead to more efficient and strategically focused management, potentially saving both time and money in the long run.
