Trustees and member nominated trustees
If your pension is a workplace pension scheme, it is likely to be run by a board of trustees. Trustees are legally responsible for protecting the scheme and its benefits.
Trustees will normally run your pension scheme and are legally responsible for protecting the scheme and its benefits. Trustees have to act in the best interests of all current and potential members of the pension scheme and have a range of obligations. You can find out more about what powers and responsibilities the trustees have in protecting your pension from your scheme rules.
The duties of trustees
Trustees have four key duties, under law.
- act in line with the trust deed and rules;
- act prudently, responsibly and honestly;
- act in the best interests of the members and potential members of the scheme (including dependants); and
- act impartially.
In order to perform their duties, the trustees must:
- know and understand enough about the scheme and issues that will affect it, including pensions law and investments, to be able to run the scheme properly
- make sure that there are proper controls in place to identify when things might be going wrong and to take action.
- keep members up-to-date with appropriate information about the scheme and their pension savings
- have the necessary advisers in place to help them with their role.
Your trustees may also include an independent or professional trustee - someone whose job is to be a trustee, usually for several schemes. They have the same duties as other trustees, but are expected to have a higher degree of knowledge and understanding about the scheme and pensions in general because they're usually qualified pension professionals or actuaries.
Types of Trustees
There are different types of trustees:
- Individual trustee - typically one of several trustees responsible for running the scheme.
- Corporate trustee - A corporate trustee will be usually be a director of that company or someone with authority in the company. They have the same responsibilities as an individual trustee in relation to the scheme. The employer itself may be the corporate trustee.
- Member-nominated trustees (MNTs) or member-nominated directors (MNDs) - These are trustees/directors put in a place as a result of a ballot and successful nomination.
- Employer-nominated trustees (ENTs) or employer-nominated directors (ENDs) - These are trustees who have been in put in place by the employer.
- Independent trustees - professionals who are expected to have a higher degree of knowledge in this area and are paid for their services.
Because the role of the trustees in protecting the benefits is so important, the scheme's trust deed and rules will set out:
- the length of time a trustee can hold office;
- the total number of trustees;
- how many trustees must be member nominated trustees;
- how trustees are chosen; and
- how and when trustees can be removed.
Member nominated trustees
Although all trustees must act impartially, the law requires that at least one-third of the trustees should be nominated by the members of the scheme. This way the board of trustees typically has representation from the employer, the membership and independent people who can consider, from a range of perspectives, the effective running of the pension scheme.
Some schemes invite those who have left the scheme but not yet taken their benefits or opened their pot, to put themselves forward. Some schemes may specify that one or more of the member nominated trustee posts must be filled by one of these members.
Some defined benefit schemes also state that one or more of the member nominated trustees should be a pensioner.
The scheme's trust deed and rules will set out how member nominated trustees are selected and who can take part.
Where can I find out more?
If you need more information, please contact us. A pension specialist from our team will be happy to help with whatever pensions-related question you have. Our help is always free.