In defence of lay trustees

In October last year, the regulator published its ‘Trustee Landscape Quantitative Research’, which found professional trustees spent more time on their trustee duties, had a better knowledge of pensions law, and had a better ability to assess the value for money of investment advisers than lay trustees. The theme was picked up in the pensions press.

Of course, there can be no doubting the benefits professional trustees bring to schemes up and down the country, and I am very lucky to work with many of them. 

With more and more regulation and a heavy burden on trustees, their knowledge and experience is invaluable – particularly in complex matters such as litigation.

However, it would be a shame if the industry lost its lay trustees completely. They often have a close link to members, as well as an intimate knowledge of the scheme and what matters to members.

They often have a real understanding too of the sponsor’s history. In my experience, lay trustees can bring an emotional connection and accountability to the job that can instil confidence in members and makes communication easier. These skills can work well to complement the skills of professional trustees.

When I have worked with lay trustees on large, complex matters, they are quite often the ones who bring the pensions professionals (including advisers) back to basic principles and objectives: testing and probing the significance of the detail being discussed. Combined with a professional’s expertise, this can produce a very well balanced board.

The issue seems to be a live debate as far as the regulator is concerned. A key point for me is that different types of trustee boards will suit different schemes at different times. We might end up with professional-only trustees, or professional trustees being required on all schemes, but for now there should be no ‘one-size-fits-all’ approach.

Chris Brown is an associate in the pensions team at law firm Burges Salmon