The Sole Trustee, a service from Law Debenture
LawDeb Pension Trustees is happy to act as a sole trustee of a pension scheme. A sole trustee sits in the place of a traditional trustee board.
Many employers sponsoring pension schemes are deciding that appointing a sole trustee is an effective and efficient solution to the challenges they face.
There are various reasons for appointing an independent trustee. These include:
- Efficient implementation of key projects such as buy-in, investment strategy change or wind-up
- Difficulty in filling trustee posts
- Seeking to improve scheme governance
- Containing costs
- Limited managerial time
- Avoiding conflict and conflicted interests
- Ever increasing legal, tax and regulatory complexity
As the sole trustee of a scheme, LawDeb Pension Trustees will take responsibility for its management and operation, drawing on its unrivalled experience.
This gives the former/retiring trustees peace of mind which comes from appointing a highly professional, independent and efficient sole trustee. All stakeholders can be confident that LawDeb Pension Trustees will take all the decisions and co-ordinate all of the actions needed to manage the pension scheme fairly and effectively.
A key feature of this solution for employers is that the sole trustee becomes the trusted point of contact for all the aspects of the pension scheme. Regular open dialogue with the scheme sponsor is paramount. We will also work with the pension scheme’s advisors to get the best from them in a cost-effective way. Our approach to members is to be accessible and open. LawDeb Pension Trustees acts independently, but collaboratively in navigating the complexity of pension scheme issues.
LawDeb Pension Trustees regularly reviews the development and progress of each sole trustee client against their specific business or journey plan. This involves a number of our experienced Trustee Directors and supporting staff to ensure that we deploy the appropriate level of knowledge, experience and challenge.
For more information see our Frequently Asked Questions below, contact us or any member of our team.
Sole Trusteeship FAQs
1. Why appoint a Sole Trustee?
A sole trustee delivers a professional scheme governance structure that releases the sponsor to focus on running its business, secure in the knowledge that the pension scheme is being well-governed and strategic pension issues are escalated appropriately.
A sole trustee replaces the traditional trustee board completely. It has the same fiduciary duties as the traditional trustee board and will manage the scheme in accordance with the Trust Deed and Rules. The sole trustee becomes the point of contact for all aspects of the pension scheme, working with all stakeholders towards the optimal solutions.
Some of the reasons a sponsoring employer would appoint a sole trustee are:
- When a scheme stops being a benefit to current staff and becomes a resource drain;
- When a specific project is planned such as a buy-in, buy-out or investment strategy changes;
- When there is limited management time and difficulty filling trustee posts; and
- When the sponsoring employer is not based in the UK and wants to appoint someone in the UK to manage the scheme.
2. What do I need to do to appoint a sole trustee?
Find the provider that has the experience and vision to suit your scheme’s requirements
- As the sole trustee is the sole contact for the sponsor and scheme stakeholders you must appoint someone who understands the scheme and can work well with a wide audience;
- A sole trustee must have both breadth and depth of experience ideally with a strong support network, to whom specific technical questions can be posed;
- A sole trustee must have a good understanding of regulations and good governance practices.
Work with your existing trustees to smooth the transition to sole trusteeship
A concern some sponsors have when appointing a sole trustee is the loss of member insight that could support decision making, such as the plans of members to take early retirement or if they are facing health challenges. A sole trustee will work with the existing trustees, sometimes as a co-trustee initially, to ensure the transition runs smoothly and existing knowledge of the scheme is shared.
On occasion, trustees might not want to leave their positions. This can be managed via the sponsor, trustee board and/or trust deed and rules. Various transition arrangements to help allay concerns can also be considered.
An option that would assist in the transition from traditional trustee board to sole trustee is to have a quasi trustee board for a set period of time or until a particular project has been completed. In this case although the sole trustee has the decision making responsibility, quasi trustee meetings take place with a consultative committee set up by the sponsoring employer for the duration.
3. What skills and experience should a sole trustee have?
- A sole trustee should have in depth knowledge of a specific area related to pension schemes e.g. actuarial. legal, investment etc. but have wider practical experience in all aspects of managing pension schemes of all types and sizes;
- Wide market knowledge of pensions legal, regulatory, investment, actuarial, administration and covenant issues;
- Should have experienced and able support staff.
4. How can a sole trustee help to improve my pension scheme?
Many schemes appoint a sole trustee to be more cost effective. A sole trustee can help by:
- Being a trusted point of contact for stakeholders - scheme advisers need only explain their findings and proposals to one person, thus reducing the time they charge for this activity. With a traditional trustee board bringing lay-trustees up to speed and spending time and resources on training can delay decision making;
- Providing consistency - the sole trustee sets up processes and templates based on their knowledge of other pension schemes which avoids reinventing the wheel and reduces the amount of time required to manage the scheme.
If a scheme finds that their governance and reporting has not been managed effectively, a sole trustee can improve governance and reporting by:
- Introducing best practice governance based on in depth knowledge of managing pension schemes;
- The ability to manage your pension scheme in an efficient manner;
- Providing regular, written reports for stakeholders to review;
- Sole trustees tend to intervene earlier than lay-trustees if they see an issue may arise, this prevents basic errors from becoming big issues.
A sole trustee can help a buy in or a wind-up to happen quickly by:
- Using knowledge of previous buy-ins from other pension schemes and being able to avoid common pitfalls;
- Engaging all the required advisors and required support early;
- Drawing up a project plan with timescales and obtaining agreement to the plan from all required parties;
- Dealing with any surprise issues quickly and effectively;
- Ensuring the project plan is kept up to date, timescales are met and the project is delivered on schedule;
- Ensuring all legal and regulatory requirements are met.
5. What are the rules a UK pension scheme must follow?
Pension schemes in the UK are regulated by The Pensions Regulator. There is no limit to how many trustees a UK pension scheme must have except that at least one third must be member nominated trustees. However, the tPR has determined that if a sole independent trustee is the appropriate number of trustees for the proper administration of a scheme (pursuant the section 7(5)(a) of the Pensions Act 1995) then they can be appointed.
6. Who provides pension scheme sole trusteeship in the UK?
LawDeb Pension Trustees are one of the longest established independent professional trustee businesses in the UK. We have been providing the service since 1980, are experts in pension trusteeship and sole pension trusteeship, and have one of the largest client bases in this area.
Our clients tell us how much they value having LawDeb appointed to their scheme because their LawDeb representative brings insight and expertise from our entire team of 27 pension professionals.
LawDeb Pension Trustees is appointed to over 200 schemes, 14 of which are sole trustee appointments. These are a mix of defined benefit, defined contribution and hybrid pension schemes.
Our sole trustee client’s assets range from under £1million to £200million. We have grown our sole trustee team, and continue to do so, as we know that more sponsors are looking to move their schemes to sole trustee from the traditional trustee board model.
Why not look at our case studies to see how we have helped our clients to operate more effectively.