When does a Professional Corporate Sole Trustee Make Sense?

Pension scheme governance is evolving.

Increasing regulatory expectations, a more volatile investment landscape and greater scrutiny from stakeholders are changing what is required of trustees. At the same time, shifts in funding positions – particularly the emergence of surpluses in many defined benefit schemes following the recent period of higher interest rates – are introducing a new set of strategic decisions for sponsors and trustees.

Recent market events have underlined how important effective governance is in practice. The LDI crisis highlighted the need for trustees to understand complex investment strategies and respond quickly to market stress. Current geopolitical events continue to illustrate the importance of strong governance processes and risk management. Put simply, discharging the fiduciary duty of trusteeship has become more complex.

Against this backdrop, many sponsoring employers and trustees are asking a fundamental question: Is our current governance model still fit for purpose?

For some schemes, the answer may involve appointing a Professional Corporate Sole Trustee (PCST).

What is a Professional Corporate Sole Trustee?

PCST is an independent corporate entity appointed as the sole trustee of a pension scheme. It is sometimes also referred to as “sole trusteeship” or “corporate sole trusteeship”. While terminology varies, these terms are generally used to describe the same governance model.

Unlike a traditional pension trustee board made up of employer and member nominated trustees, fiduciary responsibility sits with a professional pension firm. In turn, that firm delegates authority to pensions experts within its organisation to manage the scheme. The PCST acts in the best interests of members and in accordance with:

• pensions legislation
• regulatory guidance
• scheme rules and documentation

The appointment of a PCST removes the need to appoint employer and member nominated trustees. For sponsors, the key distinction is that governance responsibility is centralised within a professional structure designed specifically to manage pension schemes.

Do I only get one trustee with a PCST?

A common misconception is that a Professional Corporate Sole Trustee means a single individual trustee.

In practice, this is not the case. The term “sole” refers to the legal structure – a single corporate entity acting as trustee – rather than the number of individuals involved. Behind that entity sits a team of professional trustees, bringing a breadth of experience and specialist expertise.

Governance standards reinforce this approach. The Association of Professional Pension Trustees (APPT) Code of Practice includes a “two-person rule”, ensuring that material decisions are supported and appropriately challenged within the trustee structure.

At IGG, we operate in line with this principle. While the scheme has a single corporate trustee, decision-making is supported by a team-based model, including at least two accredited professional pension trustees, providing both depth of expertise and appropriate internal challenge.

Why are more schemes considering the PCST model?

Pension governance has become increasingly technical and strategically important. Trustees are expected to oversee complex investment strategies, navigate regulatory change and manage long-term funding decisions, often alongside their primary professional responsibilities. As a result, many sponsors are exploring governance models that deliver greater expertise, clearer accountability and more efficient decision-making.

Our recent PCST 360 report highlights the scale of the governance improvements many schemes experience following a PCST appointment. Among sponsoring employers surveyed:

• 100% reported improved governance
• 58% described the improvement as significant
• 79% said they spend less time managing their scheme

This improved governance was likely driven by the impact of appointing a PCST on decision-making and professional expertise. Over a third of sponsors cited quicker decision-making as the main benefit of appointing a PCST, while just over a third identified increased professional expertise as the primary advantage of the model. In this environment, the ability to make informed, timely decisions with clear accountability is becoming increasingly important.

When does a PCST model make sense?

A Professional Corporate Sole Trustee is not the right governance model for every scheme. Many trustee boards continue to operate effectively with a combination of employer and member nominated trustees, potentially alongside a professional trustee. However, PCST appointments are often considered to tackle:

• increasing governance complexity
• significant strategic change, such as risk transfer or corporate activity
• trustee succession challenges
• growing regulatory demands on trustees
• a desire for cost efficiencies

In these circumstances, consolidating governance within a professional structure can provide greater continuity, efficiency and expertise.

For sponsoring employers, it can also significantly reduce the internal time spent managing pension scheme governance, allowing management teams to focus on the wider business while maintaining confidence that the scheme is being overseen effectively.

What should schemes consider before appointing a PCST?

While the model offers clear benefits, several factors should be carefully considered.

Cost

Professional trusteeship involves a cost, particularly where a professional trustee is not already part of the governance structure. However, streamlined governance processes, reduced training requirements, more focused adviser oversight, and quicker decision making can offset these costs over time.

Governance culture

Moving from a trustee board to a PCST structure represents a shift in governance culture. Some sponsors or members may initially perceive a loss of involvement or representation.

Successful PCST arrangements address this by establishing structured engagement mechanisms that maintain transparency and stakeholder involvement. These can include:

• advisory committees involving member representatives or former trustees
• flexible communication styles with sponsors
• clearly defined sponsor consultation points
• regular communication frameworks with members

These mechanisms ensure stakeholder engagement is maintained while preserving the clarity and accountability of the PCST model.

What steps should a scheme take when considering a PCST?

For schemes considering a move to a Professional Corporate Sole Trustee model, the transition is typically structured and phased. Key steps often include:

• assessing the current governance model and identifying where additional expertise or capacity is required
• engaging with stakeholders, including sponsors, existing trustees and advisers
• defining the future governance framework, including any advisory or engagement structures
• selecting the appropriate PCST firm for your scheme
• planning the transition, ensuring continuity of decision-making and oversight
• implementing the new structure in a way that maintains confidence among members and stakeholders

A well-managed transition ensures that the benefits of the PCST model are realised without disruption to the scheme or its members.

Considering a Professional Corporate Sole Trustee?

A Professional Corporate Sole Trustee is not the right model for every pension scheme. Many trustee boards continue to deliver effective governance with a mix of employer, member and professional trustees.

However, as pension schemes become more complex and regulatory expectations continue to rise, many sponsors are reconsidering whether their current governance model provides the expertise, continuity and decision-making clarity required to navigate these challenges effectively.

For schemes facing governance fatigue, succession challenges or significant strategic decisions, appointing a Professional Corporate Sole Trustee can provide a compelling alternative.

Ultimately, the question is not simply whether to appoint a PCST, but whether the scheme’s current governance model is equipped to meet the demands ahead.

If you are reviewing your scheme’s governance model or would like to explore whether a PCST could be appropriate, our team would be happy to discuss this further.

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