No sign of demand for PCST services slowing down

Efficiency and end-game expertise amongst the factors driving further growth of sole trustee appointments in 2025.

• IGG surveyed major advisory firms to understand how they see demand for the Professional Corporate Sole Trustee (PCST) model changing in the near term.
• 93% of advisory firms expect to see a continuing surge of schemes adopting the model in the next 12 months.
• Growth is being driven by the desire for efficient, effective decision making.
• Increasing demand for expertise in end game strategies is also driving expansion of the PCST model.

A resounding majority (93%) of pensions consultancies expect to see a further surge of PCST appointments over the next 12 months.

IGG’s research draws on the experiences and expectations of 14 major consultancies who collectively advise many of the UK’s corporate pension schemes.

Among the firms who expect to see more growth in PCST appointments, one in three (31%) anticipate a ‘significant increase’ in demand during 2025. The remaining 69% expect a ‘slight increase’.

Adoption benefitting from proof of concept

Consultancies identify the need for more expertise in end-game planning as a key driver for schemes to switch to the PCST model.

Recent analysis from The Pensions Regulator (TPR) shows 3,750 of 5,000 DB schemes are in surplus on a low dependency basis. A further 950 are approaching the same level of funding, suggesting significant potential demand for the PCST model in the future.

Responses to IGG’s research also pinpointed regulatory drivers such as TPR’s effective systems of governance (ESOG) requirements as a key driver of demand.

They observed the upswing in PCST appointments has helped to prove the value of the model, with many schemes reporting positive experiences from making the switch.

Finally, IGG’s research shows that skills challenges are an ongoing factor in PCST adoption. Consultancies highlight difficulties in finding both member- and employer-nominated trustees, resulting in a limited pool of people with the skills, experience, willingness and ability to join a diverse trustee board.

Internal and external drivers of PCST adoption

IGG’s assessment of the corporate pensions landscape also examines consultancies’ experiences with schemes that have switched to a PCST approach and examines their motives for doing so.

A desire for more efficient and effective decision-making emerges as the primary reason which prompts sponsors to consider the PCST model. A combination of internal and external factors make up the top three reasons for switching, with firms initiating more complex projects while also facing an increasing regulatory and compliance burden.

Key prompts for sponsors to consider the PCST model (most to least important):

1. Enhancing efficient and effective decision-making
2. Complex projects being initiated
3. Actual increased regulatory & compliance burden
4. Desire to reduce sponsor management time
5. Cost efficiencies
6. Lack of member nominated trustees
7. Lack of employer nominated trustees
8. Streamlining journey to buyout
9. Potential future increase in regulatory & compliance burden
10. Relationship between sponsor and trustees

Annabelle Hardiman, Trustee Director and Head of PCST at IGG, said:

“Our findings make it clear that we’ve not yet reached the point of ‘peak PCST’ as the pensions landscape continues to evolve.

“The rising number of PCST appointments in recent years has had the knock-on effect of growing awareness of the options available to sponsors at different stages of their journey . With more schemes striving to reach a positive end game outcome, we expect to see the PCST population growing again next year in response to demand.

“It’s important to remember that appointing a sole trustee isn’t a silver bullet solution for every need. PCSTs don’t have a monopoly on good governance, innovating thinking and efficient decision making, but in the right conditions and with the right implementation, a sole trustee can be an enabler of all this and more.

“Pension schemes find themselves caught in the crossfire between operating efficiently, driving down costs and improving member outcomes, while also managing the demands of an increasingly complex regulatory environment. A sole trustee approach can be a vital ingredient to balance that equation and make the difference between these goals being ‘aspirational’ or ‘achievable’.”

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