Trustees exodus is slowing down, with the number of trustees saying they are planning to step down decreasing to 73% from 80% the previous year, according to a survey from Charles Stanley Fiduciary Management.
The survey polled 67 professional pension trustees of UK defined benefit (DB) pension schemes, who manage an average of five DB pension schemes each, with an average scheme size of £415m (€482m).
When polled last year, 80% of pension trustees were planning to step down from their roles within three years. The latest research shows that this number has dropped to 73%.
Charles Stanley said this was a sign that the industry has become marginally more stable, after the last few years that saw the COVID-19 pandemic and LDI crisis demanding hugely more complex investment and strategic decisions.
However, while the number of trustees planning to step down is lower year-on-year, three-quarters of all trustees still plan to step down. This according to Charles Stanley signals that the industry continues to face an exodus in high-value pension professionals.
Of the trustees saying they are planning to step down, 13% plan to exit their roles in less than six months, and 37% plan to exit in seven to 11 months. Meanwhile, 22% plan to leave within one to three years.
This takes the mean number of months in which professional DB pension trustees plan to step down from their role to 16 months – down from 20 months in 2022.
Some 22% of trustees cited burdensome regulations as the reason for stepping down, but 39% cited retirement as the reason for stepping down, the survey disclosed.
Charles Stanley said there is a need to find the next generation of trustees to alleviate an impending skills gap.
According to Bob Campion, senior portfolio manager at Charles Stanley, the research shows a degree of stabilisation in an industry affected by serious regulatory pressures and reporting requirements in recent years.
He acknowledged that almost three-quarters of trustees are still standing on the precipice of exiting their roles and leaving a serious deficit of expertise and experience.
“Onerous reporting requirements have once again reared their ugly head in 2023 as a factor pushing trustees out, but the effect of impending retirements continues to be the biggest pressure,” he added.
Campion noted that to avoid a sudden shortfall in professional oversight, which would put people’s pensions and investments at risk, the industry needs to radically increase efforts to try to attract and retain the required influx of new talent.
Kim Nash, managing director at ZEDRA Governance, said that the requirements of the job are increasing all the time and the expectations of a professional trustee continue to grow.
She said: “This has encouraged some trustees so step away from the role but the influx of new trustees from the consulting world has more than made up for this decline.”
Nash added that ZEDRA looks to attract new talent by making it a “genuinely great place to work”. And as the expectations of professional trustees grow, she said that ZEDRA has “implemented robust processes around recruiting and growing the talent within our organisation”.
She said: “New client directors are supported to develop and learn through working within current client teams, getting involved in our diverse governance roles and being mentored by more experienced colleagues. We encourage different views and healthy debate on current topics as well as individual client issues.”
Nash added: “We believe this diversity of talent and views ultimately delivers better outcomes for members.”
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