UK trustee firms have warned that pension fund consolidation risks creating conflicts of interest unless governance frameworks are strengthened, as the government closes its consultation on raising standards in trusteeship and administration.
The consultation, launched in December 2025 to support the Pension Schemes Bill, proposes centralised standards for trustee knowledge, accreditation for professionals, and measures to improve board diversity.
The consultation also sought views on how to ensure appropriate standards for pension scheme administrators.
Trustee firms broadly support the goal of ensuring the governance frameworks keep pace with the rapidly changing pensions landscape.
In the defined contribution (DC) market, this is particularly critical, according to David Brooks, head of policy at Broadstone, as consolidation accelerates, creating a landscape centred on a small number of large-scale megafunds.
Brooks said trustee boards must strengthen their approach across a range of areas, from clearer risk‑appetite statements and more robust committee structures to independent oversight of illiquid assets and stronger operational‑resilience and cyber‑governance disciplines.
But he also warned that structural conflicts of interest become more pronounced as market concentration increases. To protect member outcomes, schemes may require “greater structural safeguards” where decision‑making becomes more concentrated, he said.
That could involve independent procurement for major mandates, comply‑or‑explain rotation cycles for key advisers, and multi‑party review processes for material decisions made by Professional Corporate Sole Trustees (PCSTs).
Brooks added that consolidation requires regulators to intervene earlier and more decisively when weaknesses emerge, with enhanced powers to appoint professional trustees, mandate independent audits and secure more timely reporting.
TPT Retirement Solutions also warned that consolidation is reshaping the risk landscape. Larger, often commercially owned funds bring new systemic risks and heighten the potential for conflicts of interest, it said.
Trustee independence from scheme funders will therefore become “increasingly important”, alongside stronger technical capabilities and clearer ways of embedding member perspectives into decision-making.
Rauri Grant, head of policy at TPT Retirement Solutions, said policymakers “must ensure the right safeguards are in place to make sure trustees are able to act in the best interests of their members, without influence from either commercial providers or trustee firms.”
The Independent Governance Group (IGG) took a different stance, arguing that conflicts are inherent in all trust‑based structures and can be effectively managed through rigorous governance rather than by restricting trustee firms from offering complementary services.
Louise Davey, trustee director and head of policy and external affairs at IGG, said the priority should be “higher, clearer standards”, including mandatory professional accreditation and proportionate firm-level oversight, alongside robust conflict management.
She said: “Conflicts are and always have been inherent in all trust-based structures, what matters is how they are governed.”
The Association of Professional Pension Trustees (APPT) pointed to its PCST code of practice, which sets out expectations for managing potential conflicts when trustee firms provide sole‑trustee services. These include robust identification and management of conflicts at the selection and appointment stage, transparent governance around supplementary services, and requirements to obtain independent professional advice rather than relying on advice from affiliated firms.
In line with The Pensions Regulator’s General Code, APPT said trustees should also ensure full disclosure of material relationships to support transparency and mitigate risks.
