Occupational Pensions Defence Union
If you are a pension scheme trustee, you may be relying on exoneration and indemnity clauses in the deed and rules and believe that this provides you with complete protection. But it doesn’t. You will not be protected for losses arising from breaches of trust relating to investments nor for civil fines and penalties nor will the clause protect you when the sponsor no longer exists. Resigning as a trustee will not protect you from acts done when you were appointed.
The risks are real…
The children of a deceased member complained that the Trustees should have exercised their discretion to award benefits on his death in their favour in line with the expression of wish form. Instead some of the lump sum was paid to his co-habitee with the balance going into a trust the income from which was to be paid to her for life and on her death the capital to the surviving children. But she did not come under the definition of dependant under the rules. The Ombudsman found maladministration and ordered each trustee to pay compensation to the children in addition to the death benefits. The decision was upheld in court.
Trustees were required to make good a scheme deficit and it was agreed that the sponsor would pay additional contributions. But the employers’ cash flow was unable to meet the extra payments and the Trustees (who were directors and shareholders of the employer) lent the employer the same amount as the extra payments. The employer went into administration. The Ombudsman held that the loans were maladministration and ordered the Trustees to pay the loans from their own resources. The appeal was dismissed.
Husband and wife were trustees of a small DB scheme and the only members. The husband ran off with most of the scheme assets. Removal of the assets resulted in a large tax charge. Despite being innocent, the wife was landed with the entire tax bill because of the joint and several liability rule. The appeal was upheld.
The OPDU Elite Policy can protect your personal assets and stand between you, the scheme and employer. It has been designed to cover you as Trustee, as well as any in house pension employees (including directors) and the scheme.
A policy from OPDU can form an effective part of a Scheme’s risk management strategy bringing together a complete risk management framework. OPDU protection stands in front of the various parties’ interests providing a quick solution as opposed to delay and expense when parties disagree or their responsibility needs to be determined.
It will cost you nothing to talk to us so please feel free to make contact.