Analysis: Defined benefit trustee boards are finding it increasingly difficult to source a full complement of member-nominated trustees, as final salary becomes a legacy benefit system. Is the rise of the sole corporate trustee inevitable?
Up until now, sole corporate trustees, where one professional takes the place of a board, have often been statutory appointments, for example at so-called ‘zombie schemes’ without a sponsor.
But anecdotal evidence suggests they are increasingly being appointed in less drastic circumstances.
“We are seeing an increase in the number of smaller-sized schemes moving to sole trusteeship,” said Phil Farrell, a partner at Quantum Advisory.
He said a key driver of the change is “the lack of volunteers or individuals willing to put themselves forward for the role”, either because younger members have no interest in a legacy benefit, or because they fear the impact arguing with their bosses will have on their career.
The move could also be a function of the maturity and increasing complexity of running a DB scheme.
“The world just gets more and more complex and the decision-making needs to become more and more fast-paced,” said Calum Cooper, head of trustee DB at consultancy Hymans Robertson.
Sole trustees “are able to bring leadership to stakeholder negotiations with sponsors who are becoming increasingly disinterested”.
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