Louise Davey: An opportunity to refine governance standards in a way that strengthens schemes while respecting the diversity of the sector.
The latest of the Society of Pension Professionals’ (SPP’s) regular columns looks at how best to strengthen decision-making, support trustees, and improve outcomes for members.
The Department for Work and Pensions' (DWP) recent consultation on trusteeship and governance comes at a time when trust-based pension schemes are facing growing complexity and operational demands.
Rather than seeking a wholesale restructuring of governance arrangements, the consultation provides an opportunity to consider how existing frameworks can evolve in a measured and practical way – strengthening decision-making, supporting trustees, and improving outcomes for members.
Proportionality and flexibility
Measures to enhance governance standards are broadly welcomed. However, schemes vary widely in size, complexity and resourcing. A governance model suitable for a multi-billion-pound scheme looking to run-on is unlikely to be appropriate for a smaller arrangement heading to buy-out. Imposing uniform requirements risks creating unnecessary burden without improving outcomes.
Proportionality should guide reform. It should allow schemes to meet higher expectations through approaches appropriate to their scale and operational context, without being forced into prescriptive structures that may add cost and complexity but little value.
Trustee capability
The consultation rightly emphasised trustee knowledge and understanding. Trustees today face responsibilities spanning ESG integration, cyber resilience, investment and funding strategy, administration oversight, and data management. Structured training and continuing professional development are essential to ensure trustees can meet these demands.
But capability is not only technical. The softer skills trustees bring – including effective collaboration, constructive challenge, clear communication, and the ability to consider diverse perspectives – are equally critical. Boards that combine technical expertise with strong interpersonal dynamics are more likely to make considered, member-focused decisions. Recognising these skills as part of governance evolution is key to supporting long-term effectiveness.
Professional and lay trustees
Professional trustees increasingly play a key role in maintaining continuity, bringing expertise, and supporting boards through complex operational and strategic issues. Their presence can strengthen decision-making and provide structure across a wide range of schemes.
At the same time, lay trustees bring value, offering insight into employer context and member experience. However, it is increasingly difficult to attract and retain lay trustees, partly due to increased responsibilities and regulatory expectations.
Reforms shouldn't create further barriers to lay participation; they should support the complementary contributions of professional expertise and insights into the needs of scheme members where possible.
As the SPP made clear in its response to the consultation, in the absence of lay trustees, e.g. in multi-employer commercial models or in professional corporate sole trustee (PCST) appointments, alternative mechanisms should be considered, such as focus groups, advisory panels and interrogation of the increasing volume of data, to ensure that member perspectives inform board decisions.
Administration – the question of regulation
Administration is an increasingly crucial aspect of governance. Trustees rely on administrators to deliver accurate, timely services and to manage complex regulatory and data obligations. The consultation considered whether administrators might benefit from a formal regulatory framework.
There is merit in considering formal regulation, particularly to improve resilience, transparency and consistency. However, any approach must be proportionate and practical. The aim should be to enhance accountability and oversight while maintaining operational efficiency, ultimately ensuring that members experience good outcomes.
Evolutionary reform
The consultation provides a valuable opportunity to refine governance standards in a way that strengthens schemes while respecting the diversity of the sector.
Enhancing trustee capability, supporting effective board dynamics and ensuring robust administration oversight are likely to deliver meaningful improvements.
Reform that is evolutionary, practical and evidence-based – rather than prescriptive or uniform – is more likely to improve outcomes for members and give trustees the confidence and flexibility to navigate an increasingly complex environment, ensuring the trust-based model remains resilient and effective for years to come.
Louise Davey is a member of the Society of Pension Professionals as well as being trustee director and head of policy and external affairs at IGG
