The Association of Professional Pension Trustees (APPT) has updated its code for sole trusteeship to include additional guidance on due diligence and measures providers should take to manage conflicts of interest.
It is the first update to the code since it was introduced in 2021, and comes as the Pensions Regulator (TPR) is increasing its scrutiny of the professional trustee sector – including working with the Department for Work and Pensions (DWP) on potential new legislation.
Julia Yates, a professional trustee at Vidett and a member of APPT’s council, led the review of the sole trusteeship code. She said: “The APPT recognises that the number of pension schemes using sole trustees has increased in recent years. It’s our intention to continue to update the code over time as the market continues to evolve, and we invite both members and other organisations to submit further suggestions for future revisions.”
Rachel Croft, chair of the APPT, said: “The APPT has, since 2019, led the way in setting out the high standards that professional trustees should work to and pioneered the accreditation of members, raising the bar of professionalism, and addressing issues of fitness and propriety.”
Croft, who is also a trustee director at Independent Governance Group, added that the APPT was “looking to work positively to further enhance standards” with TPR and the DWP, as well as educational providers such as the Pensions Management Institute (PMI) and the wider pensions industry.
The PMI’s chief strategy officer Helen Forrest Hall confirmed that the institute would incorporate the revised sole trusteeship code into its accreditation process.
“As an independent professional body, we play a key role in raising standards across the industry through our education programme and by accrediting professional and lay trustees,” Forrest Hall said.
“By working closely with industry bodies such as the APPT and all our education partners, we are committed to ensuring that trustees are equipped to deliver better saver outcomes in line with government and regulatory expectations.”
Changes to the sole trusteeship code
The new code, which will come into effect from 1 January 2026, adds several elements of due diligence and other guidance to apply when a sole trustee arrangement is initiated.
These include specific guidance to ensure the incoming professionals fully understand the pension scheme they are taking on, including its trust deed and rules. The new code also instructs trustee firms to “put processes in place to enable the adequate transfer of historic scheme knowledge from outgoing trustees and incumbent advisers”.
The updates also include measures to communicate with scheme management staff and any other professional trustees that may be relinquishing their roles as part of the move to sole trusteeship.
The new code also includes a provision around member-nominated trustees or directors and their ongoing involvement in scheme governance.
It states: “The extent to which existing [member-nominated trustees or directors] may be involved in the decision to appoint a [sole trustee] will depend on the governing documents of the relevant pension scheme, the view of the entity with responsibility for appointing trustees… and identifying and managing any conflicts of interest as appropriate.”
In addition, there is new guidance in relation to other services that may be provided by the sole trustee firm, such as secretarial services.
The new code states that the sole trustee “must consider and document how the quality and value of the additional services is assured”, and “must not rely on their own (or their affiliate firm’s) professional advice”.
TPR reacts as professional trustee sector grows
The sole trusteeship code update reflects the evolving nature of the professional trustee sector.
Last year, TPR called professional trustee firms “systematically important” to the pensions industry, given their increasing influence over pension schemes. The regulator subsequently stepped up its interactions with such companies, with sole trusteeship a key area of scrutiny.
At the end of March this year, approximately 20% of all private sector defined benefit pension schemes were overseen by a professional corporate sole trustee, or PCST, according to Hymans Robertson.
Smaller schemes are more likely to have such an arrangement, but the sole trustee model is growing in popularity for larger schemes too, the firm’s research found.
A separate report from LCP found that two in five (41%) new trustee appointments over the past year were sole trustee appointments. This included 28% of new appointments that involved pension schemes moving straight to a sole trustee arrangement without having had a professional trustee before.
This article was updated on 11 November to add a comment from the PMI.
