Once it has been decided to appoint a professional trustee to a pension scheme, the next step is to find a suitable candidate from amongst a multitude of options. Possible trustees include individuals, specialist trustee firms and corporate trustees (where the trustee is a company). Because a professional trustee is being paid for their services whereas lay trustees are not, it is essential that they fulfil their role to the required standards and are suitably skilled. Here is a guide to choosing a professional trustee:
Are they Independent?
Firstly, the candidate must have no connection to the grantor/beneficiaries of the trust prior to their appointment. This is the most crucial factor, and a professional trustee who does not fulfil this specification should not be considered. One of the primary advantages of bringing in an independent trustee is that they will help to eradicate any conflict by acting as an unbiased arbiter between grantors and beneficiaries, who have very different objectives. The Pensions Regulator holds a register of all individuals who have been prohibited from acting as a trustee. If appointing an individual, it may be worth checking this register.
What are their skills and experiences?
Whoever is being considered, their experience and skills are vital. Simply being a trustee does not necessarily mean that the individual has the relevant experience to compliment the scheme in question.
Research into the company or individual is essential. What is their background? Which schemes have they worked with before? Do they hold any relevant qualifications? What is their reputation? Many professional trustees are skilled professionals coming from backgrounds such as law, accounting or business. If a trustee is being brought in to deal with a specific issue then relevant experience is very important. For example, if a professional trustee is being brought in to assist with a scheme closure or internal conflict then they should have previous experience of dealing with the situation in question.
What are the Scheme’s Requirements?
A professional trustee needs to match the requirements of the scheme based on their previous experience and specialist knowledge. In order to ensure that this is achieved, it is a good idea for the board to draw up a clearly defined selection criteria and make sure that every candidate is measured against it.