A Professional Corporate Sole Trustee (“PCST”) won’t be the right answer for every scheme, but they are becoming increasingly popular. Just over half of our appointments at Pi are now as PCSTs.
So why might an employer wish to appoint a PCST?
- To replace experienced trustees who are retiring
- To replace company officers who are conflicted in, for example, funding negotiations or corporate transactions, or closing schemes to accrual
- To remove the increasing challenge of attracting Member Nominated Trustees
- To help meet the ongoing flood of new regulatory guidance, and a more critical and litigious society which is proving too daunting for people who already have a demanding day job.
- To help the scheme benefit from accessing increasingly complex investment options
- To help the scheme to assess and access a range of alternative strategies such as buy-ins, de-risking exercises and setting long-term funding objectives in a way that streamlines costs and manages adviser budgets efficiently.
A PCST who complies with the APPTs Code of Practice will have Accredited trustees, robust technical back-up, solid governance procedures and a lack of conflicts of interest. We are strong advocates of the accreditation process and believe that no employer should consider appointing a professional trustee who is not Accredited – to do so is to take on entirely unnecessary and unrewarded risk.
Making the transition
We often see trustee boards appoint a professional Chair, and then move to a PCST over time. This is a good means of ensuring that historical knowledge of the scheme and its members is captured. A PCST will also be happy to work alongside a consultative committee, which can be a useful conduit for communicating challenging situations to the membership, but without the legal responsibilities that come with trusteeship.
Working with the employer
Sometimes, an employer believes there is some loss of control by appointing a PCST. It should be noted that a PCST still has the same legal duty as a trustee board would have, to consult the employer, for example, when making a change to the scheme’s investment strategy. There still has to be a negotiated agreement on funding a DB scheme every 3 years, and an employer who is not also a trustee may find they are freer to negotiate in these situations.
It is, in any case, an essential part of our PCST process to keep in touch with the employer on a regular basis, to keep the employer up-to-date with the progress of the scheme, discuss major decisions, and for the trustee to learn about the progress of the sponsoring business.
Pi’s PCST team:
- Are all experienced trustees accredited by the Association of Professional Pension Trustees, with the Continuing Professional Development and “Fit and Proper” requirements that go with it
- Support each other – every lead trustee has a named support who can step in at short notice, provide peer review and challenge to ensure a robust decision-making process
- Have a solid central governance process to ensure a consistency of approach, while meeting the demands of a wide variety of schemes
- Include Actuaries, Investment Specialists, Lawyers, Covenant Advisers and governance generalists, and thus have ready access to a huge pool of knowledge
- Have access to internal procurement and secretariat specialists
- Have Professional Indemnity cover in place
Nigel Hill is an Accredited Professional Pension Trustee with over 40 years’ experience in the pensions industry. He has focussed on providing professional trustee services for more than 25 years and is a Council Member of the Association of Professional Pension Trustees (APPT) where is he also Chair of the APPT subcommittee on Sole Trusteeship where he was involved in the development of the APPT new code of practice setting out rigorous new standards for professional trustees carrying out sole trustee appointments.