Following the closure of the Department of Work and Pension’s consultation on 'Trustees and governance, building a stronger future' on 6 March 2026, we take a look at some of the key themes and what these might mean for the future of pension scheme governance.
Occupational pension schemes are already highly regulated, with powers and obligations derived from a wide range of sources. Given the sheer volume of these legal and regulatory requirements, the trustee role has inevitably become an increasingly complex and substantial undertaking. The Pensions Regulator estimates that trust-based pension schemes in the private sector are currently safeguarding the retirement savings of over 40 million members in the UK, with responsibility for managing around £1.5 trillion of assets. With this in mind, the focus on raising governance standards is not surprising.
Good governance has always been key to delivering better retirement outcomes for members. The consultation builds on the theme we have seen previously that consolidation and a smaller number of bigger, better run schemes is the way to raise governance standards.
At the same time, there is also an acknowledgement that excessive regulation can stifle growth and investment. In other words, there is a balance to be struck between ensuring that schemes are well governed and not compromising their ability to innovate and fulfil their objectives.
What makes a 'good' trustee board?
While increasing requirements for trustee training and accreditation can help to evidence technical competence, it is arguable that effective trusteeship also relies heavily on intangible soft skills that are not so easily measured. These include judgement, communication and an understanding of member needs.
In this context, the consultation recognises that a diverse trustee board may be more effective and considers measures to improve this. However, we are already moving towards models of trusteeship that do not include as many lay trustees and there is a risk that increasing the governance burden could continue this trend. A decreasing number of lay trustees could lead to less diversity on trustee boards, which could impact decision making. Lay trustees can bring important benefits and skills to trustee boards, including a different viewpoint and lived experience. The DWP recognises this and asks for views on how these benefits should be replicated in consolidated trustee structures. In Sackers’ experience, it is the unique blend of backgrounds, experience, life skills and attributes which each trustee (and particularly lay trustees) bring that ultimately influences the effectiveness of a trustee board. An over-emphasis on testing formal knowledge risks overlooking the importance of these wider competencies and soft skills.
Working with scheme administrators
The consultation also looks at the importance of pension scheme administration in ensuring good member outcomes. Having perhaps once been seen as largely a back-office function, administration is now rightly viewed as critical. The challenge for trustees here is how to understand, oversee, and maximise their strategic partnership with their scheme’s administrators. This requires an ongoing dialogue based on collaboration, openness and an appreciation of one another’s perspective. There is certainly scope here for a future, fuller consultation on administration, building on some of these key themes.
Looking ahead
The consultation is relatively light on specific proposals but covers a lot of ground, from the composition and skills of trustee boards to how occupational pension schemes are governed and administered more broadly. As to how best to raise trustee governance standards and ensure better member outcomes, this remains the ultimate million dollar question and there are no straightforward answers. However, one way forward could be to continue to support and empower trustees to develop their existing skills and to reflect on their effectiveness. After all, this principle of self-reflection is already a key component of an 'Own Risk Assessment', in which pension scheme trustees assess the effectiveness of their governance processes, which many of them are currently undertaking for the first time.
Nigel Cayless is senior counsel at Sackers
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