Pension trusts

Occupational pensions are trust-based schemes and must operate under a board of trustees which oversees:

• collection of contributions by the employer 

• investment of the contributions

• fund performance, including an actuarial report every three years

• an annual audit of the fund’s account.

The fund must be able to provide the Contracted Out Salary-Rights level, equivalent to the State Second Pension that each member gave up by joining the scheme. A third of pension fund trustees are appointed by the pension scheme members. The employer may appoint trustees and external professional trustees may also be brought in to provide specialist knowledge. Employees nominated as trustees must be given time to carry out their ! duties in working hours. As they must be fully conversant with the scheme’s trust deed and rules, with a knowledge and understanding of pensions and trust law, employers may also have to provide training.

Duties of pension trustees

Under the Pensions Act, trustees must act in the best interests of the pension scheme beneficiaries, have knowledge and understanding of pensions and trust law, and be fully conversant with the scheme’s trust deed and rules. It requires trustees to be responsible for and fully conversant with the scheme’s statements of funding and investment principles, together with any other policy document adopted by the trustees for running the scheme. Trustees are also responsible for reporting any breach of the Pensions Act or other regulations.