What does a scheme trustee do?
Trustees will normally run your pension scheme and are legally responsible for protecting the scheme and its benefits. Trustees always have to act in the best interests of all current and potential members of the pension scheme and have four key duties, under law.
- act in line with the trust deed and rules;
- act prudently, responsibly and honestly;
- act in the best interests of the members and potential members of the scheme (including dependants); and
- act impartially.
In order to perform their duties, the trustees must:
- know and understand enough about the scheme and issues that will affect it, including pensions law and investments, to be able to run the scheme properly
- make sure that there are proper controls in place to identify when things might be going wrong and to take action.
- keep members up-to-date with appropriate information about the scheme and their pension savings
- have the necessary advisers in place to help them with their role.
What are the different types of trustee?
- Individual trustee: typically one of several trustees responsible for running the scheme.
- Corporate trustee: a corporate trustee will be usually be a director of that company or someone with authority in the company. They have the same responsibilities as an individual trustee in relation to the scheme. The employer itself may be the corporate trustee.
- Member-nominated trustees (MNTs) or member-nominated directors (MNDs): these are trustees/directors put in a place as a result of a ballot and successful nomination.
- Employer-nominated trustees (ENTs) or employer-nominated directors (ENDs): these are trustees who have been in put in place by the employer.
- Independent trustees: professionals who are expected to have a higher degree of knowledge in this area and are paid for their services.
Because the role of the trustees in protecting the benefits is so important, the scheme's trust deed and rules will set out:
- the length of time a trustee can hold office
- the total number of trustees
- how many trustees must be member nominated trustees
- how trustees are chosen
- how and when trustees can be removed
Why should your scheme appoint an independent professional trustee?
An independent professional trustee is likely to act for other schemes, sometimes as an independent trustee but more often as a joint appointment covering the scheme secretary role as well. An independent trustee is expected to have a wider knowledge of the pensions market and what other schemes and employers are doing.
What attributes should an independent scheme trustee have?
This is a very important role and the individual should possess strong organisational skills combined with up-to-date pensions knowledge.
What is an independent trustee?
A trustee is independent if:
- they have no interest in the assets of the employer or the scheme (other than as trustee of the scheme)
- they have no connection or association with: the employer or any insolvency practitioner appointed to act in relation to the employer or any official receiver appointed to act in relation to the employer and
- they satisfy other conditions prescribed in regulations.
What can Caledonian Trustees do for your scheme?
There are various reasons why the trustee board might want to appoint an independent trustee
- advanced technical knowledge and understanding brought to the board
- experience across a wide portfolio of schemes
- the ability to handle conflicts of interest which are a common occurrence
- credibility to challenge and negotiate with advisers and employers and
- continuity of support and range of professional knowledge available in the background
The benefits of appointing Caledonian Trustees as your pension scheme trustee includes:
- Resolve conflicts of interest: As your independent trustee we can resolve conﬂicts of interest which may have particular relevance for company directors.
- Experience: Our Directors all are current or former pensions industry professionals, meaning their skill and experience can potentially save your scheme from having to take expensive advice from external consultants, actuaries or lawyers. A good independent trustee will be able to identify areas where external advice is required and cut out unnecessary consultancy services
- Market knowledge: We work with a number of schemes, meaning we have knowledge of how other trustee boards have dealt with certain situations – we can say what worked and what didn’t.
- External consultant/provider negotiations: Our background and experience means we are conﬁdent in dealings with external consultants also our outsider status on the trustee board means we are better placed to negotiate robustly with all external parties.
- Trustee education: The whole trustee board can learn from our experience as an independent trustee. You can consult us for clariﬁcation of any technical point or process that you don’t quite understand.