Trustee pay falls as workload ramps up

Consultancy PwC found that the salary gap between board members and trustee chairs has closed slightly, with the latter’s higher pay reflecting an average of more than 30 expected working days a year.

Although not traditionally a paid role, the Pensions Regulator has previously noted an increase in the number of lay trustees receiving some form of compensation for their duties.

The PwC survey, which covered the wide and varied spectrum between lay and professional trustees, asked participants to disclose the amount of compensation they receive for their time spent on the scheme, regardless of pay structure.

Some employers, when they turn to a professional trustee, think it’s a magic wand

Eleanor Daplyn, Sackers

Average annual pay for board members ranged from £5,856 for schemes with less than £500m in assets to £20,658 for schemes with more than £5bn in their portfolio.

Chairs of the smallest schemes are paid £24,429 on average, respondents suggested, while chairs of the largest funds can expect £59,159.

Board members catching up

While average pay fell compared with the survey’s previous iteration in 2014, the survey noted a narrowing of the gap between chair and board member remuneration, particularly in the upper quartile.

Peter Sparshott, head of PwC’s UK pensions management consulting business, said the lowering of average pay could be influenced by a higher number of respondents from smaller schemes compared with previous years.

“What we are really seeing is that plateauing of the trustee chair pay and role,” he said.

Chair of trustee workloads did not increase from their 2014 average of slightly more than 30 days a year, while regular board members have seen their expected time commitment increase progressively, to 18 days a year in 2016.

Sparshott said the effects of a tighter regulatory regime had already fed into the chairperson’s average workload. Bar a possible spike in 2019 “as we see the impact of Brexit come through”, he said that their time requirements could actually decrease as schemes mature and derisk.

Fewer schemes have professional trustees

The survey results also showed an increase in the amount of schemes with no independent trustee on their board to 33 per cent — a figure that surprised and disappointed Sparshott.

“Typically, those that have independent trustees on the board, certainly in the chair role, operate with a much higher degree of professionalism,” he said.

Forty-one per cent of schemes reported one independent trustee on their board, but Peter Askins, director at Independent Trustee Services, doubted whether these were not mostly just former employees of the company.

“In a great proportion of that they are neither independent nor professional,” he said.

The difficulty in defining what is an independent or professional trustee has led to great variations in the quality of service, he argued.

A regulator survey in July confirmed a diverse range of firm structures and ways of working, and the regulator has previously stated its intention to drive up standards of professional trusteeship.

Askins was, however, satisfied with the levels of trustee remuneration.

“It’s gratifying that you see chairmen, even though it's dropped, around £60,000,” he said, adding that the range of expertise chairs are required to wield justified a package comparable to that of a non-executive director of a company.

Should trustees be qualified?

Eleanor Daplyn, partner at pensions law firm Sackers, said she had only experienced high-quality professional trusteeship, but warned against viewing professionals as a perfect remedy.

“Some employers, when they turn to a professional trustee, think it’s a magic wand, and they feel that they might be able to replace all the adviser fees they currently have to pay,” she said.

Qualifications for professional trustees have previously been mooted as a way of safeguarding standards of governance. However, some have expressed concerns that only those who currently operate at high standards would take them.

Instead, said Kevin LeGrand, immediate past president and council member of the Pensions Management Institute, regulation would be better to focus on the role of the chair, whether professional or not, and their responsibility to ensure a “balance of experience and expertise” across the trustee board.

“If you do that I don’t think you necessarily need qualification for all [board] members,” he said.