DWP call for evidence on skills, capability, and culture of pension trustees

On 11 July 2023, the Department for Work and Pensions (DWP) and HM Treasury (HMT) jointly issued a call for evidence from trustees, advisers and other stakeholders to assist in formulating policy to improve the skills and capability of pension trustees in relation to their decision—making on investments.

Maxwell Ballad, Director at Freeths, comments on the key aspects of the consultation, the implications for pension trustees and schemes, and the next steps.


This call for evidence came a day after the Chancellor’s Mansion House speech in which he announced his ’Mansion House reforms’ with the aim of unlocking capital for companies in the UK with high growth potential and increasing returns for savers.

The call for evidence coincides with responses to the following consultations:

Key aspects, themes and issues

Trustee knowledge and understanding

The government is concerned that not all trustees may have the skills and capability to effectively consider the full range of investment opportunities and deliver the best outcome for savers. It is apparent that the DWP perceives there to be a problem, especially with smaller schemes and believes that larger schemes, in general, have better governance and that this enables the trustees to engage with more complex and potentially higher-performing asset classes.

A theme of this call for evidence and the VFM consultation is that schemes which do not meet the required standards should be wound up or merged into larger, better performing schemes. It seems clear that consolidation is seen as necessary to achieve the best outcomes both for pension savers and the UK economy.

The call for evidence cites TPR research which showed that one-third of defined contribution (DC) scheme trustees and nearly one-fifth of defined benefit (DB) scheme trustees were unaware of, or never used, TPR’s codes of practice and one in five didn’t think their trustee board had the knowledge needed to run the scheme. The DWP seeks views on the level of trustee knowledge and understanding and specifically whether trustees have the knowledge to be able to invest in the full range of investment opportunities.

The DWP is considering whether all trustee boards should be required to have a certain proportion of accredited trustees or a professional trustee. It notes that the number of professional trustees may not currently be sufficient for this but states it has a long-term vision of a smaller number of schemes, each with a professional trustee.


The call for evidence asks how pension trustees use advisers when formulating investment strategy and whether the advice they receive impacts the allocation to unlisted equities. The government wants to know whether investment consultants have sufficient experience with private equity and early-stage investment and whether trustees have the knowledge and capability to critically evaluate the advice they receive. The government is also interested in the role of other advisers in trustees’ decision-making and whether this leads to a culture of risk aversion. The call for evidence relates to DB and DC schemes and it is acknowledged that the advice provided may differ depending on the type of scheme.

Barriers to trustee effectiveness

The call for evidence notes that the pension landscape has changed since the Law Commission reported on fiduciary duty in 2014 and 2017 with DC being an increasingly important part of pension provision. As shown in the VFM consultation, it wants trustees of DC schemes to move away from focussing on cost when assessing value for savers to a more holistic approach considering performance and value.

It is suggested in the call for evidence that the scope to increase investment in a wider range of growth assets applies to trustees of DB schemes as well. It seeks evidence on whether the way in which fiduciary duty is interpreted is restricting trustees’ investment strategies and stopping them seeking the best return for savers.The call for evidence recognises that there may be other barriers to trustee effectiveness such as time off employer support for member-nominated trustees for the performance of their duties and training.

Implications for pension trustees and schemes

It seems clear that the government’s aim is to end up with a smaller number of schemes which have the size and governance structures to enable investment in a full range of asset classes including private equity and early-stage companies. It appears that it intends to force this change by increasing the pressure on trustees to demonstrate that they have the required knowledge and skills. Trustees may need to become accredited and registered. Trustee boards may also be required to include at least one professional trustee.

There isn’t much focus on the role of employers in deciding whether to wind-up or merge schemes.

What happens next?

The call for evidence runs for 8 weeks to 5th September 2023.

If you have any queries or questions regarding the consultation or the implications for pension trustees, please contact Maxwell Ballad from our Pensions Law team.

The content of this page is a summary of the law in force at the date of publication and is not exhaustive, nor does it contain definitive advice. Specialist legal advice should be sought in relation to any queries that may arise.

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