Pension Trustee Services

Pension scheme trustees face an ever-increasing burden of compliance, governance and fund investment. Whether you are a trustee of a defined benefit scheme or a money purchase scheme, you will be grappling daily with the Pensions Regulator, governance, investment returns and security for members’ benefits.

Accurate, pragmatic and cost-effective professional legal advice is vital to ensure that scheme trustees administer their scheme correctly. Risk management and security of members’ benefits are increasingly burdensome and complex issues for trustees to navigate.

Increasingly, scheme sponsors are encouraging trustees to plan a journey to buyout benefits or transfer to a master trust scheme, both of which present complicated legal challenges.

Our experienced advice team has expertise across all areas of occupational pension. We can advise trustees on an ongoing, or project-specific, basis to ensure you are protected in your decision-making and that your scheme’s members have the highest level of security.

To speak to a solicitor about our pension trustee services, contact JMW today by calling 0345 872 6666, or fill in our online enquiry form to request a call back.

How JMW Can Help

We place a high value on taking a joined-up approach to servicing trustee boards, by working closely and developing strong working relationships with schemes’ other advisers and, particularly, the administration team. We provide plain-speaking, pragmatic and practical advice that will focus on finding solutions that work in the best interests of your scheme. 

We can:

• Provide ongoing legal advice services, in all areas, to scheme trustees
• Advise on scheme mergers and restructuring
• Project manage buyout projects and bulk transfers to master trust schemes
• Give a correct interpretation of scheme rules and historic benefit entitlements
• Liaise with the Pensions Regulator on engagement over governance and employer covenant issues
• Negotiate and implement contingent assets agreements with sponsoring employers

At all times, our advice will be clear, thoroughly explained and designed to ensure that trustees are in the strongest possible position while also ensuring that scheme members receive their entitlement under the scheme rules.

What Does a Pension Trustee Do?

A pension trustee is a person or company, appointed to oversee a pension scheme. Their main role is to ensure that the pension scheme is run properly and that members' benefits are secure. Here are some of the key duties of a pension trustee:

• Compliance with the Law and Scheme Rules: Pension trustees must ensure that the scheme is managed in accordance with all relevant laws and regulations, as well as the scheme's own rules. This includes understanding and complying with the requirements set out by the Pensions Regulator.
• Protecting Members' Interests: Trustees have a fiduciary duty to act in the best interests of all the scheme's members - this includes current employees, former employees and pensioners. They are responsible for making decisions fairly and impartially.
• Managing Investments: Trustees are responsible for setting the scheme's investment strategy in line with its investment principles. They must ensure that the scheme's assets are invested wisely, balancing the need for growth with the risk involved.
• Funding and Solvency: For defined benefit schemes, trustees must regularly assess the financial health of the scheme, working closely with the scheme's actuary and the employer to ensure that there are enough funds to meet the scheme's liabilities.
• Administration: Trustees oversee the administration of the pension scheme. This includes keeping records, providing information to members, calculating and paying benefits, and dealing with member queries and complaints.
• Communication with Members: Trustees have a duty to communicate clearly and effectively with members about their benefits and any changes to the scheme.
• Risk Management: Trustees must identify and manage risks that could impact the scheme and its ability to pay benefits.

Pension trusteeship carries significant responsibilities and legal duties, and it's essential to have a clear understanding of what is involved. At JMW Solicitors, we provide comprehensive advice and support to professional pension trustees, helping them to navigate their roles and responsibilities effectively and in compliance with the law.

What are the Potential Legal Implications if Trustees Fail in Their Duties?

It is crucial for trustees to fully understand the potential legal implications if they fail to fulfil their duties properly.

• Regulatory Sanctions: The Pensions Regulator (TPR) has the power to impose sanctions on trustees who do not meet their responsibilities. These sanctions can include fines, banning individuals from being trustees, and even criminal prosecution in serious cases.
• Civil Proceedings: Trustees may also face civil proceedings from the pension scheme members or their employer if they can demonstrate that the trustees have breached their duties, resulting in a loss.
• Reputation Damage: Beyond legal and financial implications, trustees could also suffer significant reputational damage, which can affect their professional and personal lives.
• Insurance Implications: Trustee indemnity insurance may not cover breaches where there is evidence of wilful or reckless behaviour, leaving trustees exposed to potential costs.

To avoid these potential implications, trustees should ensure they are fully aware of their duties and responsibilities. This includes staying updated on changes in pension laws and regulations, regularly reviewing the scheme's governance and administration, and seeking professional advice where necessary.

Who Choose JMW?

At JMW, we understand the weight of responsibility borne by pension trustees, and we believe it's our duty to provide them with exceptional legal support. 

Our pension law team comprises seasoned professionals with extensive practical experience advising trustees on their duties, liabilities, and the complex regulatory environment they operate in. Our legal advice is grounded in a deep understanding of both the legal and practical aspects of running pension schemes.

We know that every pension scheme is unique, and so are the needs of its trustees. We tailor our services to suit the specific needs of each client, delivering personalised advice that addresses your unique challenges and objectives.

Our teams take a holistic approach to our advice. This means we not only provide legal advice on specific trustee duties, but we also look at the wider picture, advising on the scheme's overall governance, strategy, and interaction with members and regulatory bodies.

The team’s reputation speaks for itself. We have built a robust portfolio of clients who trust us with their pension trustee needs, a testament to our professional integrity, expertise, and commitment to client satisfaction.

FAQs About Pensions for Trustees

How can a trustee ensure the pension scheme is fair and beneficial for all members?

Here are some steps that trustees can take to ensure the pension scheme is fair and beneficial for all its members:

• Understand and Fulfil Your Fiduciary Duties: As a trustee, you have a fiduciary duty to act in the best interests of all scheme members. This includes making decisions fairly and impartially, managing conflicts of interest, and ensuring the scheme's rules are applied consistently to all members.
• Regularly Review the Scheme's Investment Strategy: The scheme's investment strategy should be aligned with the best interests of the members and the risk capacity of the scheme. Regular reviews and adjustments will ensure it continues to meet these criteria over time.
• Communicate Clearly with Members: Clear, regular and transparent communication helps members understand their benefits, make informed decisions, and trust that the scheme is being managed properly. Ensure members are updated about any changes to the scheme or the law that may affect their benefits.
• Actively Monitor the Scheme's Financial Health: Regularly review the scheme's funding position and solvency, and take proactive steps to address any issues. For defined benefit schemes, liaise with the scheme's actuary and the employer to ensure there are adequate funds to meet future liabilities.
• Ensure Compliance with Equality Laws: Ensure that the scheme does not discriminate against any members based on age, gender, disability, race, religion or belief, or sexual orientation, in line with equality legislation.
• Seek Professional Advice: Seek professional legal and financial advice when necessary to ensure you are making decisions that are in the best interests of the scheme's members.
• Regularly Review Scheme Management and Governance: Ensure that the scheme is well-managed, with robust governance procedures in place to identify and manage risks.
• Consider Member Feedback: Consider feedback from members and, where appropriate, engage with member representatives to understand their views and concerns.

What kind of training or qualifications do pension trustees need?

Although there are no specific qualifications required to become a pension trustee, certain specialist knowledge and training are vital to perform this role effectively.

The Pensions Regulator expects all trustees to have a clear understanding of the law relating to pensions and trusts, the principles relating to funding defined benefit schemes and investment of scheme assets, and the scheme governance and administration. Trustees are required to complete the Trustee toolkit, an online training programme provided by the Pensions Regulator, unless they can demonstrate they have the relevant knowledge and understanding through alternative means.

Once the basic level of knowledge and understanding is achieved, it's crucial for trustees to keep their knowledge up to date. This can be done through reading relevant updates, attending seminars and courses, or undertaking further online training.

Depending on the nature of the pension scheme and its investments, trustees may benefit from specialist training in areas such as investment management, risk assessment, scheme funding and actuarial methods.

While not required, some trustees choose to pursue further qualifications, such as those offered by the Pensions Management Institute (PMI), to enhance their knowledge and demonstrate their commitment to the role.

It's also important for trustees to understand the specific terms and features of their own scheme. This can be facilitated by bespoke training, often provided by the scheme's advisers.

Are pension trustees personally liable?

Pension trustees are fiduciaries, meaning they have a legal duty to act in the best interests of the pension scheme members. If trustees breach their duties, they could potentially be held personally liable for any financial loss that the scheme or its members suffer as a result.

However, trustees are typically indemnified by the scheme's trust deed and rules against liabilities and expenses incurred in the execution of their trustee duties. The extent of this indemnity can vary depending on the scheme's specific rules.

It's also important to note that this indemnity usually does not cover instances of fraud, wilful misconduct, or where the trustee has acted outside of their powers. Additionally, the Pensions Regulator can impose sanctions on trustees found to have failed in their duties, which can include fines and disqualifications.

Trustees should also consider the cover provided by any Trustee Indemnity Insurance (TII) in place. TII policies can protect trustees by covering the costs of legal proceedings and any compensation they might be required to pay. However, these policies typically do not cover liabilities arising from wilful or reckless misconduct.

Can you challenge pension trustees?

Pension trustees can be challenged if there is reason to believe that they are not fulfilling their duties effectively or acting in the best interests of the scheme's members.

Members of a pension scheme, beneficiaries, and in some cases, employers have the right to challenge decisions made by the trustees. Challenges can arise from a variety of issues, such as the distribution of scheme assets, investment decisions, or the handling of a scheme’s administration.

If you believe a trustee is not fulfilling their duties, you should first raise your concerns directly with the trustees or the scheme's administrator. If you're not satisfied with the response, you can take your complaint to the Pensions Ombudsman, who has the power to investigate and resolve disputes between pension scheme members and trustees.

Legal challenges can also be brought before the courts. This is a complex and potentially costly process, but it might be necessary in some circumstances.

However, challenging a trustee's decision or conduct is a significant step and should not be taken lightly. It's important to seek legal advice before taking any action.

Are pension trustees FCA regulated?

It is important to clarify that while pension schemes do fall under certain regulatory bodies, pension trustees are primarily regulated by the Pensions Regulator, not the Financial Conduct Authority (FCA).

The Pensions Regulator is the UK regulator specifically responsible for overseeing the running of pension schemes, and it issues the codes of practice and regulatory guidance that trustees must adhere to. The Pensions Regulator has the power to intervene in the operation of a pension scheme and can impose sanctions on trustees who fail to fulfil their duties effectively.

However, certain activities related to pension schemes do come under the jurisdiction of the Financial Conduct Authority. For example, when offering advice about investments or where a defined contribution scheme provides flexible benefits and requires members to make investment decisions, the FCA may become involved.