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Role of Trustee Board
To obtain certain tax advantages, pension schemes must be set up as a trust with the pension fund assets held separately from the sponsoring employer. ‘Trustees’ hold this property in the interest of ‘beneficiaries’. In pension scheme terms, trustees hold the assets of a scheme for the security of members’ benefits.
Main Duties and Responsibilities
Many people misunderstand the role of a trustee. Whether a trustee is appointed or nominated by the company, a trade union or by any other method, they must administer the scheme on behalf of all beneficiaries. They are not appointed to serve any one particular group and should not have any sectional interests. Their primary role is to ensure that benefits are paid in line with the scheme’s trust deed and rules and governing law. In the British Steel Pension Scheme, the sponsoring employer sets the terms of the trust deed and rules. This means, for example, that the trustees do not decide which earnings are pensionable, the level of company contributions, early retirement terms, or the nature of benefit improvements.
The list below details some of the trustee’s duties and, as you can see, it is a demanding role:
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To administer the scheme, ensuring that the benefits are paid properly, as defined by the trust deed and rules
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To collect pension contributions on time and ensure that a scheme’s assets are safe and held in the trustee’s name
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To do all they can to ensure there is enough money available to meet the cost of present and future benefits. This is mainly carried out by deciding on an appropriate investment policy, supervising the work of the investment manager, and proper cash-flow management;
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To consider the interests of all beneficiaries
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To act with care and good faith within the law and, where appropriate, to obtain expert advice;
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To safely record and protect confidential information that is received, relevant to scheme administration.