In a significant development for the UK pensions landscape, the Pensions Regulator (TPR) has announced a framework for extending its oversight to professional trustee firms. This move comes as professional trustees increasingly play an essential role in the governance of pension schemes across the UK. But what exactly does this mean for the industry, scheme members and the trustees themselves?
The growing influence of professional trustee firms
The professional trustee industry has experienced substantial growth in recent years. TPR’s chief executive, Nausicaa Delfas, recognised that there has been a marked increase in the professional trustee industry “with more than half of UK schemes using a professional or sole trustee”.[1]
This growth has led to a concentration of power, with 10 firms governing more than £1 trillion of savers’ retirement income. Recent research indicates that the market share of professional trustee firms has grown from 39% in 2020 to 43% in 2024. It is predicted that the influence and reach of these firms will continue to grow, and projections suggest they could be accountable for the governance of two-thirds of the defined benefit pension market within five years.[2]
TPR’s role and aim for oversight
TPR’s primary mission is to oversee occupational pension schemes in the UK by protecting the benefits of members of occupational pension schemes and ensuring their security. Until now, TPR’s oversight of professional trustee firms has been relatively limited compared to its broader regulatory activities. However, the growth in the professional trustee sector has prompted reconsideration of this approach.
It is expected that TPR’s market oversight team will establish ongoing relationships with professional trustee firms and assess the risks associated with these firms. In TPR’s market oversight report[3] on professional trusteeship, they identified a number of areas where they consider that risks to savers’ outcomes may arise and where they aim to focus their engagement with professional trustee firms. These included:
- trustee relationships with employers;
- whether profit and remuneration models could affect trustees’ decision-making for schemes;
- the reasons behind the appointment of sole trustees to schemes;
- the risk of in-house advisers potentially leading to compromised decision-making or advice to schemes; and
- the level of knowledge of pension scheme governance of scheme decision-makers.
TPR is seeking to establish this supervisory relationship with professional trustee firms beginning this summer with an aim to extend this approach to cover remaining firms by the end of 2025.
What does this mean for professional trustee firms?
For professional trustees, this change means greater scrutiny. Professional trustee firms will need to demonstrate robust governance processes and clear decision-making frameworks to ensure they are protecting members’ interests. The regulatory framework will require professional trustee firms to strengthen their risk management processes, with TPR particularly interested in how firms will identify risks to saver outcomes.
However, the oversight of TPR also presents an opportunity for professional trustee firms to demonstrate their value and expertise. In a competitive market, positive engagement with TPR may signal to clients and the wider market that these firms operate within a recognised framework of standards. As TPR establishes ongoing supervisory relationships with professional trustee firms, those firms that adapt quickly and effectively to the new regulatory expectations may gain a competitive advantage and offer firms enhanced credibility with clients and members.
A positive step for TPR oversight
The industry has largely welcomed this development, recognising that increased scrutiny brings both challenges and opportunities. For professional trustees, it means demonstrating higher standards of governance, managing conflicts more rigorously and maintaining transparent relationships with the regulator. For pension scheme members, it promises greater protection and improved risk management for their pension savings. As the pensions landscape continues to consolidate toward fewer, larger schemes, this regulatory development represents a timely and necessary response to changing market dynamics.
[1] https://www.thepensionsregulator.gov.uk/en/media-hub/press-releases/2025-press-releases/tpr-extends-its-oversight-to-professional-trustee-firms#:~:text=TPR%20found%20a%20variety%20of,influence%20better%20outcomes%20for%20savers
[2] https://www.isio.com/news/largest-professional-trustee-firms-increase-their-influence-on-db-pensions-market/
[3] https://www.thepensionsregulator.gov.uk/en/document-library/research-and-analysis/market-oversight-professional-trusteeship
