Trustees must be able to clearly identify scheme funds. Cookies are small files stored on your device. 12 months subscription from 308 * Subscribe now. The employer (and any previous employer involved with the scheme), and any actuary or auditor working for the employer, must give you any information that: you reasonably need for your professional advisers. A person is disqualified from being a trustee if: Other than in a few exceptional circumstances anyone acting as an auditor or actuary of the scheme cannot be a trustee of the scheme. Ten Things You Should Know About Using a Corporate Trustee If you are, you have a right to complain to an employment tribunal. All these documents are open to review and inspection by all the trustees. This duty is often known as 'whistleblowing'. provide timely and relevant information to: members approaching retirement about the options they have, respond to important issues and make decisions effectively, operate efficiently and free up time to focus on strategic priorities, monitor and oversee the main scheme activities effectively, including those delivered by third parties such as risk management, administration, investment and member communication, the appropriate governance structure for the scheme, proportionate to your schemes risk and complexity, what matters are reserved for the trustee board, what can be delegated, for example to sub-committees or working groups. Separate guidancecontains examples of breaches of the law and explains whether we would consider them to be of material significance. The trustee is responsible for distributing income and principal to the beneficiaries of the trust according to the terms specified by you, the grantor, in the trust We use cookies to improve your browsing experience. Cookies are small files stored on your device. details of transfers of members' benefits into and out of the scheme. [back to Providing information to members and others], The law: Occupational and Personal Pension Schemes (Disclosure of Information) Regulations 2013 Trustees have overall control of a charity and are responsible for making sure it's doing what it was set up to do. There are different categories of trustees, but you will normally have the same duties and powers. the fees and management charges they are levying. This includes the power to: The regulator's approach is to help trustees and employers understand the scheme funding requirements and equip them with the appropriate knowledge to carry out the funding process without regulatory intervention. You must make sure that the employer does not influence your decision to the extent that you breach any of your duties. The trustee of a trust can be an individual or a company. What is a Written Resolution for Shareholders in the UK? The Trust Quarterly Review is published in partnership with STEP, it discusses matters of interest to trustees and executors with a focus on the particular interests of trust corporations in mind TACT members You must keep the records for at least six years from the end of the scheme year to which they relate. You must tell scheme members about it. take advice from your legal adviser if you have any doubts or concerns about using the power. As you may know, if you are a company director, you owe specific duties to your company, like avoiding conflicts of interest. The basis of trust law is that one group of people (the trustees) hold assets for the benefit of another group of people (the beneficiaries). If something goes wrong, trustees may be personally liable for any loss caused to the scheme as a result of a breach of trust. the dates when contributions should be paid. 1. These are important documents, and trustees must be familiar with them and with other documents governing the scheme. You should not backdate the appointment. You should only contact us if you reasonably believe that the failure is of material significance. For example, one such 'trap' contained in this legislation prevents the discharge of a trustee unless they are . Please note: this is not the correct option to choose where the trustee performs its trusteeship for profit. Trustees must act within the framework of the law. Usually the power to do so rests with the employer and the trustees must agree its use. A professional trustee commonly provides services to a number of unrelated pension schemes. active members employees who are building up benefits in the scheme; pensioner members people who are receiving a pension from the scheme; deferred members people who have left the scheme, but who still have benefits in it (for example, because they have not transferred all their benefits to another pension arrangement); prospective members people who, if they go on to meet the eligibility conditions, may be entitled to join the scheme at a future date; dependants of members for example, their children or other relatives who financially depend on them; former husbands and wives of members who, as a result of a court order on divorce (for example a pension sharing order) have been granted pension credits within the scheme; and. Register for our free webinar today. They are important documents and, therefore, you must be familiar with them and with the other documents governing your scheme. The trust deed and rules for your scheme may not always be up to date. check the limits of the power in the trust deed and rules; follow any procedures set out in those documents; ask for, and consider, all relevant information (ignoring irrelevant information) before reaching a reasonable decision; and. Some individuals volunteer to be trustees and start with little knowledge or experience of what being a trustee involves. The principal types of professional advisers, and their roles, are described below. Trustees must monitor and check that the correct contributions are paid, and that they are paid on time. If a decision may be taken, all trustees must be given notice of the occasion (which will usually be a trustee meeting) stating the date, time and place, no later than 10 business days beforehand unless the trustees agree other arrangements. The law: s247-248 of the Pensions Act 2004 other information that we reasonably need to carry out our duties, for example, to assess the risks for each scheme. You need to make sure that, as a trustee, you have all the original documents and records relating to the scheme, for example: Scheme records are trustee property; they do not belong to the employer. [back to Personal profit], The law: s241-242 of the Pensions Act 2004 Most importantly, they cannot own property or enter into contracts in their names. You should have clear contractual terms (where appropriate), terms of reference, tables of accountabilities and delegated responsibilities, and service level agreements. You must log in or sign up to use the Trustee Toolkit. direct how technical provisions are to be calculated; direct the period within which, and how, any failure to meet the statutory funding objective is to be remedied; and, Drawing up a statement of investment principles. Without a subpoena, voluntary compliance on the part of your Internet Service Provider, or additional records from a third party, information stored or retrieved for this purpose alone cannot usually be used to identify you. A corporate trustee, which the law refers to as a trust corporation, is an incorporated body, such as a company, that acts like any other trustee. This means the parish councillors are the mechanism that the Trustee (the parish council) uses to carry out its decisions. Each of these can be funded by contributions from the employer only (a 'non-contributory scheme') or from both the employer and employee (a 'contributory scheme'). Most of the duties we have outlined in this guide continue to apply even if a scheme is being wound up. Someone will normally be considered a professional trustee if they have represented or promoted themselves to the trustees or sponsors of one or more unrelated schemes as having expertise in trustee matters generally (rather than just in certain areas), whether for remuneration or otherwise. It will help the board to: In accordance with trustee powers under the scheme rules and documents, the board should decide: For delegated matters you should decide and document how decisions are made and escalated and who does this. Certain employer-related investments are not allowed at all. The code of practice MNT/MND - putting arangementsin place and guidance on MNTs and MNDstells you more. This places a value on the scheme's liabilities which can then be compared to the value of the assets; working out what contributions need to be paid to the scheme in future, after taking account of any surplus or deficit, and certifying the schedule of contributions; calculating transfers out of the scheme and for calculating members' benefits on transfers in; and. Your browser is out of date, and unable to use many of the features of this website. You can update your scheme registration at anytime using Exchange. The trust deed and rules set out the trustees' powers and the procedures trustees must follow. If they do include one, read through this list and confirm or reconsider the reason, the value and the importance of including a Corporate Trustee in your estate plan. You also have to be responsible for monitoring scheme investmentsand keeping an eye on the financial strength and health of the employerwho is standing behind the scheme. You need clear and accurate details of transactions to and from the scheme and up-to-date information about its past and present members. We maintain a register of every person we have prohibited in this way. This means that, as a trustee, we do not want you to tell us about every late payment. As a trustee of a scheme offering DC benefits, you have a responsibility to support your members in making informed decisions. [back to Appointing and removing professional advisers], Pensions law: s34 of the Pensions Act 1995 You will also consider the strength of the employer covenant. The regulator must be told about any changes to the information within a reasonable period. For most schemes, you cannot normally invest more than 5% of the scheme's assets in employer-related investments. Please enable javascript to ensure you can use this website to its full extent. stock investors or bond investors). This does not mean that a trustee cannot be a scheme member. This means focusing on strategic issues and considering whether to delegate some day-to-day activities and decision-making. An individual nominated as a trustee through a process in which at least the active members and pensioners (or bodies representing them) may participate and selected by a process in which at least some members may participate. What is a trustee? | MoneyHelper Although the existing trustees will still be required to carry out their duties, the statutory independent trustee will take over the exercise of their discretionary powers. This means they do not have separate legal personhood. It does not mean that you have to agree with the employer or carry out their wishes. In the case of an MNT or MND who is a member of the scheme when they were appointed, your role as trustee may end if you stop being a member. The full list of notifiable events can be found in the regulations. Home | TACT - The Association of Corporate Trustees Trustee - who and why? For example, if the scheme documents say that decisions must be made in a trustees' meeting and agreed by at least two-thirds of trustees, you must keep to this rule. Reporting late payments to The Pensions Regulator, Drawing up a schedule showing the contributions due, the contributions that should be paid to the scheme; and. You can learn more about these topics in the Trustee toolkit. legal assistance through our membership. For example, pension contributions deducted from pay at any time during June must be handed over to the trustees by 22 July (or 19 July if by cheque) at the latest. Having established the investment strategy you should prepare the scheme's statement of investment principles (SIP). names of the trustees (and others, such as scheme advisers) who were at the meeting; names of the trustees who were not at the meeting; date, time and place of any decisions made since the last meeting, including urgent decisions, and the names of the trustees who took part. A pension scheme has long-term liabilities. So you need controls in place to monitor and make sure that all the activities you are accountable for are delivered. A replacement scheme auditor or scheme actuary must be appointed within three months. You must check the trust deed and rules if you are unsure about whether the scheme should be wound up. The key activities include: During a scheme wind up members may be feeling anxious and it is important that you keep them informed about what is happening. If The Pensions Regulator or a court fines you as a result of a breach, you can neither pay the fine out of the scheme's assets nor use the scheme's assets to pay the premiums for a policy insuring you against fines. Jake received his Graduate Diploma in Law from the University of Law. However, where you have delegated responsibility for investment decisions, your liabilities are generally more restricted. Trustees have . An employer who fails to hand over employee contributions within the required time is breaking the law. the members (including pensioner members and deferred members); a widow, widower or someone else entitled to benefits as a result of a member's death; individuals who were recently in one of these categories; and. You also need this information to be able to satisfy your other duties as a trustee for example, to be able to account to HM Revenue and Customs for any tax due or deducted from benefits paid, to obtain an auditor's statement and to prepare your annual report. For schemes providing any form of defined benefit, this goes beyond the collection of employer and employee contributions you also have to make sure that the contribution rates are sufficient to provide the benefits under the rules of the scheme. In practice, pensions are increasingly complex. If you plan to appoint a custodian to hold the scheme's assets, you should choose the custodian carefully after considering matters such as: You should also check the arrangements in place between the custodian and the fund manager for making sure the assets the custodian holds are the same as those reported by the fund manager. keep scheme members informed about their scheme's funding position by issuing regular summary funding statements. For example, the employer should tell you about: Trustees should treat the information they receive from the employer as confidential, and they should not pass it on to anyone other than their appointed professional advisers. The technical storage or access is required to create user profiles to send advertising, or to track the user on a website or across several websites for similar marketing purposes. You and the employer need to form and maintain a good working relationship. This note summarises the advantages and disadvantages of adopting such a structure. advising you on the implications for scheme funding of events affecting the scheme, and on options for members' benefits. By law you are required to appoint various 'professional advisers' to assist you in running the scheme. Employer-nominated trustees (ENTs) or employer-nominated directors (ENDs) may include senior employees like the finance director, where their financial experience and knowledge of the company may be helpful to the trustees or the directors of the trustee company. If the scheme auditor or scheme actuary resigns, they must give you the same statement or declaration. Trustees should request that any real or potential conflicts should be disclosed to them trustees also need to ensure that adviser conflicts are managed. the liabilities of the scheme, other than the liabilities to pay pensions and benefits after the end of the scheme year. Technical provisions are an estimate, based on actuarial principles, of the assets needed to cover the schemes liabilities. There are several instances where corporate trustees are allowed to act in such a way that non-corporate trustees cannot. advising before taking important decisions which relate to scheme funding such as on the content of the statement of funding principles or the schedule of contributions; certifying the calculation of the technical provisions; preparing actuarial valuations at least once every three years. The scheme auditor will audit the accounts that you have prepared, or that have been prepared for you by your adviser. [back to Trustees' duties], By law: s120 of the Pensions Act 2004 Our guidance on the auditor's statement and audited accounts gives more information on these requirements. Liabilities include pensions in payment, benefits payable to the survivors of former members and those benefits accrued by other members which will be payable in the future. In schemes offering DC benefits the individual member has a lot of decisions to make about the way they save andwhat they do withtheir pension savings when they reach retirement age. Corporate trustee where the trustee is a company, you will be a director of that company. Indeed, this is one of the highest standards the law imposes on individuals. The Pensions Regulator's expectations Plan for the next three years Conversely, trustees that are natural persons cannot always do the same. There are some exceptions, which are described below. If the employer becomes insolvent, an insolvency practitioner, or the official receiver acting as the receiver or liquidator, is likely to be appointed to act for the employer. A company or corporate entity appointed as a trustee by the Pensions Regulator. Call us today at 0808 196 8584 or visit our membership page. Pensions legislation provides that: You must keep proper records for running the scheme effectively. However, where relevant, we will consider on a case by case basis whether any trustee or trustee director is in fact a professional trustee. Notably, this differs from the usual rule that a trustee can only charge a fee for their service if there is more than one appointed trustee and they are acting in a professional capacity. If, as is sometimes the case, the employer is the only trustee, trustee documents should be kept separate from company documents. Often they will also be members of the scheme, employees of the sponsoring employer, or both. It is against the law for a trustee to be dismissed or detrimentally treated for carrying out your duties or using your powers properly. For more information, see our conflicts of interest guidance. In the most basic sense of the term, A corporate trust is a trust created by a corporation. This doesn't mean that, as a trustee, you can't be a member of the scheme but, as a lay trustee, you mustn't profit from the scheme in other ways. in the module 'Introducing pension schemes'. The law requires trustees, employers and professional advisers to share certain information. If these matters are not set out in the scheme documents, you can usually agree your own working methods. Even if you stop being a trustee, you are still liable for the decisions you took when you were a trustee. As a trustee, your must protect the interests of beneficiaries. The Pensions Act 1995 requires that some changes to subsisting rights known as 'protected modifications' will always need the member's consent - for example, changing the type of benefit the member has already earned from a defined benefit to a defined contribution basis. The tutorial 'Duties and powers' in the module 'The trustees role' will help you consider your duty to members and their money and what powers you may have. There are differentcategories of trustees and you may be one or more of the following: You have a number of key duties as a trustee. hybrid schemes (mixture of defined benefit and defined contribution benefits). you do not perform one or more of the duties that you have under trust law or pensions law or do not perform them with sufficient care. If you owe a fiduciary duty, the law requires that you act towards this person with the utmost good faith. As a trustee, you must act in line with the terms of the trust deed and rules. A trustee is a person or firm that holds and administers property or assets for the benefit of a third party. Good scheme administration is vital to the proper running of a pension scheme. The trust deed is a legal document that sets up and governs the scheme. Our code of practice - Modification of subsisting rights- outlines how trustees may satisfy this requirement and the standards it expects them to meet. The SORP is published by the Pensions Research Accountants Group (PRAG) and is available to purchase via their website. act for a charity that is either a trust or an unincorporated association. If you do, and you want to accept contributions into the scheme in respect of them you will need to apply to The Pensions Regulator for authorisation and approval for your scheme. Name a Corporate Trustee as a trustee of last resort. A trust is a legal relationship whereby an individual, individuals or corporate entity (known as a trustee or trustees) hold title to and manage property or assets (the trust property) for the benefit of one or more beneficiaries as governed by the terms of the Trust Deed.