Overly burdensome regulation (56 per cent) is driving professional trustees from the industry, according to new research conducted by leading Charles Stanley Fiduciary Management. A further 44 per cent said their own lack of knowledge to perform the role is a key contributing factor.
The study also found that reporting requirements are too onerous for two in five (41 per cent) professional trustees and is motivating their decision to step down from their position in the next three years. Further evidence of this is that a quarter (24 per cent) say that the role is taking up too much of their time. Just 12 per cent cite the fact that they are leaving as it is the end of their tenure.
According to the research, almost two thirds (62 per cent) of professional trustees of DB schemes plan to step down from their role within the next three years. Of which, almost a third (31 per cent) say they plan to step down in the next 7-11 months, and a quarter (25 per cent) plan to do so in the next 1-3 years. Respondents claimed they planned to remain in post on average for around one and a half years*. These findings highlight not just a critical need to stem the outflow of experienced trustees but shine a spotlight on the challenges that need to be properly addressed in order to attract and retain the required new influx of talent.
Among all respondents, almost half (45 per cent) feel not only that regulation is overly complex but that they also have insufficient support from official bodies – 16 per cent felt this strongly.
Bob Campion, Senior Portfolio Manager, Charles Stanley Fiduciary Management, says: “Trustees play a crucial role in securing the long-term stability and success of pensions funds. While regulatory oversight is rightly rigorous, if it becomes so complex and burdensome that it’s driving trustees out of the industry; that should ring alarm bells. A trustee drain would significantly hinder the pension sector.
“This is an issue that the Government and regulators must address, but the burden is also on the industry to listen. Given the wide range of technical matters trustees have to address it’s more important than ever before that trustees have the right support from service providers and advisers so they feel confident their pension schemes are operating within a robust governance framework. In terms of investment governance, fiduciary managers have a vital role to play in providing that support.”