Mapping the trustee landscape

Centre for Advanced Studies in Finance

Dr Iain Clacher is an Associate Professor in Accounting and Finance at Leeds University Business School and is the co-director of the Centre for Advanced Studies in Finance. His main research interests focus on: pensions and retirement saving decisions, pension investment and infrastructure, and sustainable pension systems. Hannah Preston is the editor of the Research and Innovation blog.

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Despite being responsible for around £1.5 trillion of pension assets and the retirement outcomes of large swathes of the UK population, there has been little research concerning trustees of defined benefit pension funds.

Working with Drs Richard Hodgett and Simon McNair, I have partnered with Aon Hewitt – a leading global provider of investment consulting services and adviser to pension scheme decision-makers – to undertake research exploring trustee investment decision-making. This includes perceptions and understanding of costs and value, investment risk and return, manager selection and the role of bias in all these areas.

Following the research (which was based on a survey of 197 trustees) we published a report in February 2017 providing an overview of the UK trustee landscape.

Our main findings from the data analysis are as follows:

1. The sample of trustees is highly educated relative to the general population.

78% of trustees examined have at least an undergraduate degree and many possess a high number of professional qualifications, such as Chartered Financial Analyst (CFA), Foundations in Accountancy (FIA) and Chartered Accountant (CA). 

This is important as the 2001 Myners Report (a joint government and industry forum established to create a best practice approach to investment decision making for pension funds) found that ‘many trustees are not especially expert in investment.’ In many instances, the pension fund is often large enough to bring down the firm, or at the very least, seriously damage the firm’s long-term performance were the pension fund to underperform significantly, and so it is critical that trustees are educated to a necessary standard.

Our sample shows a positive change in this status, with the ‘average’ trustee being considerably more educated than the general population.

2. Trustees exhibit a high level of financial literacy.

In addition to the trustees’ higher level of education, our research also shows that the majority of trustees are appropriately confident in their level of financial knowledge.

Respondents were asked to rate their own level of financial literacy and to then complete a widely-cited five-item measure of financial literacy. To benchmark trustees’ levels of understanding, we assessed objective financial literacy in terms of factual awareness, and calculative ability involving key concepts such as time value of money, real versus nominal returns, and compounding (where the value of an investment increases because the earnings on the investment accrue interest over time).

3. There is a lack of diversity on trustee boards.

One issue that emerged through our analysis is that of diversity. Less than 20% of our sample is female and the majority of trustees are aged between 50 and 70; the average trustee is a 54 year-old male.

As a result, there is a lack of diversity on trustee boards. This creates two potential issues. First, there is little diversity of opinion across gender; extant research shows that the presence of women on corporate boards is beneficial for monitoring and board process and that female board members have a greater impact where governance is weaker. Gender diversity on trustee boards is therefore an important issue to consider going forward as it may improve board effectiveness.

Second, there is a risk that trustee boards are not exposed to new ways of thinking, or at least the diversity of approaches that a more age-diverse board would otherwise have. This is not to say that all decisions reached would be different. However, there may be instances when a broader perspective would be advantageous and improve decision-making.

4. The average trustee has nearly ten years of experience.

Our research found that the average experience (in years) of trustees averages just fewer than ten, with the maximum being 34. The average experience of trustees is therefore not inconsiderable as not only do they have almost a decade of experience on average, but looking at the past ten years, they have experienced some of the most turbulent and difficult markets in living memory.

5. A majority of trustee boards have between five and seven members and meet on a quarterly basis.

At the majority of these board meetings, up to 25% of the meeting time is spent discussing investment matters (over 84% of our sample feels that this amount of time is about right).

Just under two-thirds of schemes have an investment sub-committee and just over two-thirds of our sample respondents sit on investment sub-committees. This suggests that the majority of respondents are going to be engaged with the investment decision-making and strategy much more frequently given the quarterly meetings that most have and that this may speak to a higher degree of financial expertise.

This initial report, mapping the trustee landscape, forms part of a series of reports that will provide a deeper analysis on trustees’ perceptions of costs and value, investment risk and return as well as manager selection.

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We will be sharing future reports on our Research and Innovation blog. For more information about this research, please contact

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The views expressed in this article are those of the author and may not reflect the views of Leeds University Business School or the University of Leeds.