[back to Legal requirements when choosing investments], Pensions legislation: s32 of the Pensions Act 1995 The law of trusts has developed over many years through Acts of Parliament and through case law. So you need controls in place to monitor and make sure that all the activities you are accountable for are delivered. You can learn more about this topic in theTrustee toolkitin the tutorial 'Investment in a pension scheme' in the module 'An introduction to investment'. You could be personally liable for any loss which you cause to the scheme as a result of a breach of trust. This section of the guidance describes your duties as a trustee in the following situations: Pension schemes may be wound up for a variety of reasons. If you are, you have a right to complain to an employment tribunal. Call us today at 0808 196 8584 or visit our membership page. [back to Notifiable events sectiion], Whistleblowing: s70 of the Pensions Act 2004 Roles and responsibilities | The Pensions Regulator The essential trustee: what you need to know, what you need to do - GOV.UK 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. Members | TACT - The Association of Corporate Trustees details of transfers of members' benefits into and out of the scheme. Just like a director owes a duty to their company, so does a trustee owe a duty to their beneficiary. exercising a power of attorney on behalf of another. This includes share certificates, title deeds to property, and any other documents of title showing which assets belong to the pension scheme. You're able to test your knowledge and understanding as you go along and print out a development record to prove your achievements. For most schemes, you cannot normally invest more than 5% of the scheme's assets in employer-related investments. [back to Providing information to members and others], The law: Occupational and Personal Pension Schemes (Disclosure of Information) Regulations 2013 However, you will have the same responsibilities as an individual trustee in relation to the scheme. But it is good practice to appoint all advisers and have a formal agreement with them, including where the employer provides any administration services. This means that, as a trustee, we do not want you to tell us about every late payment. The SORP indicates best practice in accounting and financial reporting by pension schemes and supplements the general accounting principles set out in FRS102. Pension schemes are affected by specific legislation, including Acts of Parliament, and regulations. This may be where the employer has the power to make changes to the scheme but needs your agreement, or in relation to discussions over the funding of the scheme. This section of the guidance provides information and advice on your relationship with the sponsoring employer: The cornerstone of a good working relationship between trustees and the sponsoring employer is clear and open communication. other information that we reasonably need to carry out our duties, for example, to assess the risks for each scheme. This means the parish councillors are the mechanism that the Trustee (the parish council) uses to carry out its decisions. A trust company is a legal entity that acts as a fiduciary, agent, or trustee on behalf of a person or business for a trust. As a trustee, your must protect the interests of beneficiaries. Employers should pay the contributions set out in the schedule, including those deducted from their employee's pay, by the due dates shown. The data we collect is anonymised. The trust deed and rules, together with pensions legislation, tell you what your powers are as a trustee, and the procedures you must follow. You should have clear contractual terms (where appropriate), terms of reference, tables of accountabilities and delegated responsibilities, and service level agreements. Our guidance for trustees outlines some of the wide-ranging responsibilities placed on pension scheme trustees and some of the powers they usually have. It will also explore a trust corporations primary responsibilities and duties. You also need to provide information to individuals on other occasions either automatically or if they request it for example, when a member retires, dies or leaves the scheme. If a court or tribunal is deciding whether a particular requirement has been met, they will take the code of practice into account. When dealing with individual beneficiaries you will also have to weigh the interests of that individual against the needs of all the other beneficiaries. What is a corporate trustee? - Civil Society A defined contribution (DC) scheme must have a 'payment schedule'. There is an event that has a detrimental effect upon the scheme, The pension scheme is operating across EU borders. For more information, see our conflicts of interest guidance. When applied to a pension scheme, trust law provides the foundation for how trustees must act in relation to the scheme. If these matters are not set out in the scheme documents, you can usually agree your own working methods. The scheme return notice makes it clear the date by which the trustees must complete and send the return back. The exemptions are set out in the Notifiable events directions (PDF). Naturally, you must not make any unauthorised personal profit at the expense of the fund. Other ways in which employers can provide retirement benefits for their employees include: The law requires that most occupational pension schemes in the UK are set up as trusts. If you don't know, check your documents. 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. The SORP is published by the Pensions Research Accountants Group (PRAG) and is available to purchase via their website. A discretionary power allows the trustees a choice, for example to decide: When considering whether to use a discretionary power, you should: You must follow the procedures set out in the trust deed and rules when considering whether to use a discretionary power. Trustees must: Where a scheme is being registered for the first time the trustees must provide all the information within three months of the scheme being established. Employers may also find this guidance a useful explanation of the trustee's role. Any decisions made between meetings must be included in the minutes of the next trustee meeting. If something goes wrong, trustees may be personally liable for any loss caused to the scheme as a result of a breach of trust. Where the trustee is a corporate trustee, the law makes an exception. The trust deed is a legal document that sets up and governs the scheme. they are convicted of an offence involving dishonesty or deception (unless the conviction is spent); they are an undischarged bankrupt, or have entered into certain other voluntary agreements with creditors; they have been disqualified from acting as a company director; they have property in Scotland which is covered by a sequestration order; the person is a company and any director of the company has been disqualified from being a trustee; or. Corporate Trustee Management Services | Mercer Advisors When a corporate trustee is set up the individual trustees become directors of the trustee company. They must also confirm that they will tell you about any conflict of interest that affects their role as soon as they become aware of one. What is the Difference Between a Subsidiary and a Branch in the UK? This website requires cookies. The settlor is responsible for appointing the trustee to administer the trust and decide who the beneficiaries of the trust are. 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 should take professional advice on any matters which you do not understand and on technical issues which may affect the scheme. Your email address will only be used to reply to your comment. The trust deed and rules give the trustees powers, some of which will be discretionary. Home | TACT - The Association of Corporate Trustees TACT seeks to advance education in trust law and practice through knowledge sharing and discussion. Technical provisions are calculated using an accrued benefits funding method and assumptions chosen by the trustees, after taking the actuary's advice and usually obtaining the employer's agreement. Below, youll find definitions of individual and corporate trustee types. how do I know my scheme is being run well? A trustee is a person or firm that holds and administers property or assets for the benefit of a third party. The law requires that you must provide us with information at certain times and in particular circumstances. Often they will also be members of the scheme, employees of the sponsoring employer, or both. take advice from your legal adviser if you have any doubts or concerns about using the power. the information needed for the register; and. Corporate trustee - where the trustee is a company, you will be a director of that company. The trustees of most pension schemes have to make information available about the scheme, including how it is run and the benefits that it provides. Please enable javascript to ensure you can use this website to its full extent. If you are a trustee, or are considering becoming one, you need to understand some basic details about pensions, trustees and the legal framework surrounding occupational pensions. If a decision has to be taken urgently, you do not have to give formal notice. It is also important to be mindful of the statutory powers and restrictions which are relevant on a change of trustee. Trustees must be able to clearly identify scheme funds. You may be running a scheme that offers both. A skills audit is a useful way of identifying what trustees bring, and the gaps in skills and knowledge on your board. Use of legalvision.co.uk is subject to our There are different types of trusts and they are taxed differently. The trust deed and rules for your scheme may not always be up to date. A confused director asks the expert. Clearance is the term used to describe the voluntary process of obtaining a statement from the regulator that gives assurance that we will not use our anti-avoidance powers in relation to an event. Corporate trustee vs Individual trustee - 10 Things to Consider It is a complex area of law, so it is best practice to seek the advice of a lawyer. A 'beneficiary' is anyone who is entitled to, or who might receive, a benefit from the scheme, now or in the future. In our February 2020 briefing, we looked at the advantages and disadvantages for pension schemes of replacing a trustee board of individuals with a corporate trustee.In this briefing, we consider further a particular type of corporate trustee, namely the professional corporate sole trustee (PCSTs), in the context of the new Code of Practice which has been published by the . Register for our free webinar today. Corporate trustee where the trustee is a company, you will be a director of that company. 1. [back to Trustee knowledge and understanding section], Certain exemptions: Occupational Pension Schemes (Trustees' Knowledge and Understanding) Regulations 2006 defined benefit schemes (sometimes known as 'salary-related' or 'final salary' schemes); defined contribution schemes (sometimes known as 'money purchase' schemes); and. A trustee is a person or company, acting separately from the employer, who holds assets in the trust for the beneficiaries of the scheme. The law also requires you to be familiar with certain scheme documents including the trust deed and rules, the statement of investment principles and the statement of funding principles. Trusts involve: the 'settlor' - the. If the trust deed and rules do not give details on how decisions should be taken, they may be made by a majority of the trustees. The technical storage or access is strictly necessary for the legitimate purpose of enabling the use of a specific service explicitly requested by the subscriber or user, or for the sole purpose of carrying out the transmission of a communication over an electronic communications network. Any later appointments will usually be made by an amending deed or deed of appointment (or by the method set out in the trust deed). You will also have to inform us when particular scheme or employer-related events and certain breaches of the law happen. the ability to deal with land in a certain way. As a trustee, you will have to approve the audited accounts, and the scheme auditor must sign the report. What is a corporate trustee and how does it differ to being a trustee of an unincorporated charity? When considering the investment of scheme assets, trustees must be aware of some important provisions of pensions law: Pensions law allows you to delegate day-to-day investment decisions, and sets out your responsibility for the decisions taken. A company that acts as a corporate trustee should not be engaging in any business activities and should only serve as the trustee of the trust. the suitability of different asset classes to meet the needs of the scheme and future liabilities; the risks involved in different types of investment and the possible returns that may be achieved; and. 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. For more information, see our codes of practice on reporting late payments of contributions to: These explain the types of situation that we think are materially significant and how reports should be made. [back to Providing information for the register and the scheme return], Issue a scheme return: s63 of the Pensions Act 2004 Some advisers must have professional qualifications and meet professional obligations in order to act. One of your most important responsibilities is to make sure that the right money is paid into the scheme at the right time. [back to UK law applying to pension schemes], The Pensions Act 2004: Corresponding reference for Northern Ireland: The Pensions (Northern Ireland) Order 2005 taking regular advice from their advisers before making decisions about changing circumstances and more complicated issues. Please enable javascript to ensure you can use this website to its full extent. 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. They must also be correctlyappointed. This includes exercising those powers: When choosing investments, you (or the fund manager acting on your behalf) must exercise your investment powers in line with the scheme's statement of investment principles (SIP). An employer, or group of employers, can choose to set up an occupational pension scheme to provide pension and other benefits for their employees when they retire. If the trustees have the power to make amendments you must notify the employer of your proposed amendment and ensure that no changes are made until the employer has carried out the necessary consultation. What is a Written Resolution for Shareholders in the UK? stock investors or bond investors). As a trustee, you are responsible for the proper running of the scheme from the collection of contributions, to the investment of assets and payment of benefits. They may be known by other titles, such as: directors. You must log in or sign up to use the Trustee Toolkit. privacy policy. You need clear and accurate details of transactions to and from the scheme and up-to-date information about its past and present members. For more information, including good practice examples, see our guidance on winding up. You must check the trust deed and rules if you are unsure about whether the scheme should be wound up. The Pensions Regulator focuses its efforts on matters that pose a real risk to members' benefits. The trust deed usually sets out how a trustee should retire or otherwise be removed. As a trustee, you are responsible for ensuring that the scheme assets are identified and protected, and that the wind up is completed as quickly as possible. That is why it is important that, whenever you delegate one of your duties, you have procedures in place to monitor the performance of the person acting for you. If an employer has the power to make an amendment, as a trustee, you must agree to that amendment being made. These member-nominated trustees (MNTs) and member-nominated directors (MNDs) must be nominated by at least the active and pensioner members of the scheme and selected by some or all of the members. 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. Jake received his Graduate Diploma in Law from the University of Law. Send an email, with 'Beneficial owners at risk of harm' in the subject line, to: trs.riskofharm@hmrc.gov.uk. You can learn more about this topic in the Trustee toolkit in the tutorial 'Agreeing a schedule of contributions' in the module 'DB recovery plans, contributions and funding principles'. It is usually good practice to record the factors that influenced your decision. A surplus may also arise in a defined contribution scheme when all the liabilities in respect of a member, beneficiary or his estate have been secured by the purchase of insurance policies, or paid in full.