As specialist trust dispute solicitors, we are often instructed to advise trustees on their rights, duties and obligations in order to avoid disputes and prevent potential trustee liability. In this article we will review trustee duties in straight forward, simple terms.
The trustees hold the legal title of the pension scheme assets on trust for the beneficiaries. The trustees have strict legal duties to ensure those assets provide benefits in accordance with the terms of the trust. Remember, however, statue overrides a trust document and so professional advice should be sought.
If trustees breach their duty, then they are likely to be personally liable. Indemnity insurance is a must. Remember exoneration clauses in a trust document does not prevent the pensions regulator from imposing a fine.
A pension scheme trustee's basic duties are to:
- Hold the trust assets;
- Invest the trust assets prudently and in accordance with the terms of the trust;
- Collect contributions as required by the terms of the trust; and
- Pay the benefits in accordance with the terms of the trust.
In addition to this, trustees ought to:
- Be familiar with the pension scheme's documentation;
- Have an understanding of the legal, funding and investment obligations relating to the scheme.
In order to discharge those duties, and avoid any potential liability, we would advise trustees to:
- Read and understand the trust document. This is essential, if not laborious.
- Seek professional advice on the nature and scope of the trust document, to ensure the trustees have a clear understanding of the aim of the trust, rights, duties and obligations;
- Seek professional advice prior to any investments being made. If a property is to be purchased for example, instruct a specialist surveyor to value the property and comment on the commercial viability of the purchase.
- Keep good records, and have a system in place to ensure records are not destroyed.
- Be open and ask questions, discuss the purpose of the trust with other trustees and keep minutes.
- Regularly review the trust, actions taken and make a plan going forward. This is particularly necessary at the time a new Government budget is released. Uncertainty in the economy, changes in tax legislation, changes in stamp duty, can all affect current and future investments.
- Get trustee insurance. Even with the greatest of due diligence, trustees are human. Mistakes can be made. Trustees have potential personal liability, and so indemnity insurance is an absolute must.
For more information contact Ben Wilson in our Wills, Probate, Tax & Trusts department
via email or phone on 0333 207 1130.
Alternatively send any question through to Forbes Solicitors via our online Contact Form.
Learn more about our Wills, Probate, Tax & Trusts department here
Inheritance Act claim allowed 25 years out of time
Mediation and the NHS