03 October 2017

What is a professional trustee?

In the past, the Pensions Regulator regarded a trustee as a professional if they either charged for their services (over and above expenses) or held themselves out to be an expert in trustee matters. 

This left the contrast with lay trustees unclear, particularly as the practice of paying trustees has become more common and the Regulator has urged all trustees to raise their knowledge and skills.

New professional trustee description

The Regulator has now adopted a concept of a professional trustee as someone (an individual or a company) who acts as a trustee of a scheme in the course of a business of being a trustee. But there is more to it than that. 

The Regulator says it would not normally consider a paid trustee to be acting in the course of business of being a trustee if:

  • they are or have been
    1. a member of the scheme, or of another scheme sponsored by an employer in the same group or
    2. employed by, or a director of, an employer participating in the scheme (or an employer in the same group) and
  • they do not act, or offer to act, as a trustee of a scheme outside the group.

If someone represents herself to a scheme outside her group as having expertise in trustee matters generally (whether or not for pay), the Regulator would normally consider her to be acting in the course of the business of being a trustee.

The above is labelled a “description” of a professional trustee rather than a “definition” with the aim that its soft edges will cater for the wide variety of trustee structures. 

The Regulator’s Professional trustee description policy (PDF) has several case studies to illustrate how it would view different combinations of facts. 

Important points for trustees

  • Pay still plays a part in professionalism but is no longer centre stage.
  • If the Regulator considers a trustee to be a professional in relation to one scheme, it will take them to be professional in relation to all schemes where they are a trustee.
  • Those with power to appoint trustees are expected to understand whether an appointee will be a professional in the Regulator’s eyes.
  • Whether a trustee is designated a professional or not in the scheme return is not decisive. The Regulator will form its own view based on all relevant considerations if the issue arises.
  • This concept of a professional applies in areas where the Regulator has regulatory and enforcement powers. Where pensions legislation defines different types of trustee in particular contexts, those definitions apply and not the Regulator’s concept.

If you would like to discuss whether you or anyone on your trustee board are likely to be count as professionals in the Regulator’s eyes, please contact Richard Knight or your usual contact in our pensions team.

Key contact

Richard Knight

Richard Knight Partner

  • Head of Pensions Practice
  • Pensions Services
  • Pensions Legal Advice

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