Who is Protected
To achieve the aim of insuring everyone who might become liable for a loss as a result of internal maladministration of the pension scheme, the insured has been broadly defined to include:
- Pension Trustees
- Corporate Trustees
- Directors of Corporate Trustees
- The Pension Scheme
- Sponsoring Employers
- Internal Advisers
- Internal Administrators
- Internal Dispute Managers
This helps to reduce internal conflicts and eliminate disputes between insurers representing different interests.
What risks are covered
To achieve the aim of providing an external resource for reimbursing losses suffered by the pension scheme, even in some circumstances where no person is legally liable for the loss, the cover provided is broad and includes:
Errors and omissions
Trustees and employees engaged in the administration of the pension scheme are covered for losses suffered as a result of wrongful acts, such as breach of trust, negligence or misrepresentation.
TPR civil fines and penalties
Trustees, employees and sponsoring employers are covered for civil fines and penalties imposed by The Pensions Regulator (TPR) and for legal costs incurred in connection with investigations and prosecutions by TPR or other official body.
Trustees, employees and sponsoring employers are covered for awards made by the Pensions Ombudsman and for legal costs incurred in defending determinations and appealing his decisions.
Expenses incurred in taking action to prevent, limit or mitigate exposure to an actual or potential claim.
Trustees, employees and sponsoring employers are covered for legal costs and expenses incurred in defending claims brought against them in connection with their duties to the pension scheme. These costs can include references to alternative dispute resolution and arbitration.
Where the sponsoring employer is required to indemnify a trustee or employee, the Policy reimburses the employer for the indemnity, thus offering valuable balance sheet protection.
Where persons cannot be held liable for Net Loss caused to the pension scheme by wrongful acts as a result of being excused by exoneration clauses in the trust deed, the Policy can nevertheless reimburse the loss to the pension scheme.
Court application costs
Sometimes issues arise where the trustees are advised to seek directions or a declaration from the court as to future conduct of matters or the interpretation of trust documents. Normally several interests have to be represented by separate lawyers and all parties costs have to be met out of the pension scheme's assets. The Court Application Costs Extension, an optional cover, reimburses costs ordered to be paid out of the pension scheme.
During a pension scheme's membership of OPDU, all retired pension trustees and administrators remain covered. If a pension scheme leaves membership, retired trustees and retired named administrators have insurance cover for their lifetime should no alternative cover be provided. This provides individuals with valuable peace of mind in their retirement when they no longer have any say in whether their pension scheme should purchase insurance cover.
Other expenses covered include: investigatory costs; public relation expenses; employee benefit programmes and/or employee share ownership programmes; loss of documents; prosecution costs arising from a claim or investigation; extradition proceedings and bail bond costs; and third party service provider pursuit cover for the purpose of establishing a breach of professional duty of care.