What is an independent trustee?

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What is an independent trustee? I have heard the term before, but not really thought about what it means until now, as I have to write an assignment on the topic.

I have done some research into the term and the key points I have gathered are these:

An independent trustee is a professional with a complete pensions focus. Most independent trustees have previous experience of working in the financial industry and are often former actuaries, lawyers, investment managers or investment consultants, so have the benefit of experience which they can bring to a pension scheme (DB, DC and hybrid), along with a truly independent viewpoint, making them able to contribute to trustee discussions  and make better quality decisions that focus on the best outcomes for members.

Sounds good so far, so what does an Independent trustee do? Turns out, they do quite a few things, a couple of examples are:

They oversee the management of ever increasingly complex pension schemes. Pension schemes now have to deal with a variety of issues such as new regulation, greater diversity of investment products and scheme deficits, which can be very time consuming and can/do present conflicts of interest for lay trustees.

One of the benefits of hiring an independent trustee is that their experience and knowledge means that they can confidently approach/challenge external consultants and equally they can help to manage conflicts of interest within a company, for example, a finance director who is also a trustee has to make decisions regarding deficit funding and employer contributions which lead to conflicts of interest with the employer, can instead be passed to the independent trustee to tackle.

Independent trustees also look to work with trustee boards to review the governance (governance is making sure a company’s operational processes are robust and responsible) of the pension scheme and suggest changes that will either improve existing operations or make them more efficient and cost-effective.

However, there are lots of other types of work that independent trustees do, for example, they can be the Chair of Trustees, help with DC Governance, Pension or Sole Trusteeship, give Investment Committee Support and there are also other Governance roles. Check out www.bestrustees.co.uk for details on each of these services and further information on independent trustees.

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