If you’re a new pension scheme trustee you’ll need to quickly get to grips with your duties and to understand what the role involves.
Keeping the retirement savings of your scheme members safe is challenging but rewarding work. Scheme members rely on trustees to be effective guardians of their rights and benefits.
The role of a trustee will require you to identify, assess and mitigate risks. You will also have to make sure that your scheme is well run to keep the chances of things going wrong in the future to a minimum.
Trustee knowledge and understanding
You must have the relevant knowledge and understanding to perform your role within six months of your appointment.
You will need to have knowledge and understanding of pensions and trusts and the law relating to them, the principles of funding pension schemes and investing assets on behalf of members. You’ll also need to understand how your scheme works, including the rules that govern it.
The Trustee toolkit is a free online learning programme that helps you gain the relevant skills, knowledge and understanding. It is required study for new trustees, unless you can find alternative learning that covers the same areas at a level relevant for you and within the timescale allowed.
You can also read more about what new pension trustees need to know and understand.
Professional trustees, or trustees appointed for their specialist expertise, are required to have the relevant knowledge and understanding when they are appointed.
Role and responsibilities
You will need to find time to get familiar with the role and the responsibilities of being a pension scheme trustee. Above all you must act prudently, responsibly and honestly.
The trust deed and rules of your scheme should outline how you should handle some key issues. This includes how many trustees need to attend a trustee meeting to take decisions on behalf of all of them, and the powers the trustees have.
Pension trustees are there to act in the best interests of scheme members. This includes considering the interests of all classes of members – active, deferred and pensioner. This may involve weighing the interests of the individual against the need to protect the security of the membership as a whole.
Read more about the role and responsibilities of pension trustees.
Trustee board
The trustee board is responsible for the governance of the pension scheme. This is an important task and one that differs significantly from a management role.
It's the board's legal duty to make sure the right processes, systems, people and procedures are in place to manage the scheme, its investments and the risks that can arise.
Meetings
Trustee meetings are formal occasions where minutes are taken. The trustee board reviews the position of the scheme and makes decisions on its future.
There should be standard items on the agenda at every meeting. Extra items can be added as and when they need to be discussed. Timescales should be set to deal with each issue on the agenda. If you feel a subject is not being given enough time at meetings you should make sure that you raise this as a concern.
Trustee toolkit online learning
The trustee’s role module in the Trustee toolkit covers what it’s like to become a trustee and attend meetings of the board. You must log in or sign up to use the Trustee toolkit.
Using advisers
Trustee boards appoint specialist advisers to provide information and guidance on the status of the scheme and how decisions might affect it in the future.
While a trustee can delegate responsibility for fulfilling certain scheme functions to advisers or service providers, for example issuing annual statements to members or reporting information to us, you cannot delegate your accountability. This is important. The decisions taken on your scheme may have a significant effect on the pensions your members receive. Accountability for these decisions rests with the trustees alone.
Your advisers are there to support, rather than lead, the trustee board. Make sure you take the time to discuss the advice and support on offer, and don’t be afraid to challenge your advisers to justify the actions they recommend. You should only make a decision once you feel you have received all the information you need.
For more about delegation of responsibilities, including the exceptions for decision-making about investment of scheme assets by professional fund managers, see employers, advisers and service providers.
Conflicts of interest
It’s likely that all trustees will encounter conflicts of interest at some point. These must be dealt with properly. It’s important that conflicts of interest are declared to make sure the trustee board is aware and able to take sensible steps to address any conflict.
There may be different conflicts of interest depending on whether you’re running a defined benefit or defined contribution scheme. Go to conflicts of interest in your DB scheme or conflicts of interest in your DC scheme.
Trustee toolkit online learning
There is a tutorial in 'The trustee's role' module of the Trustee toolkit that will show you how important it is to be aware of any conflicts of interest and how to respond to them. You must log in or sign up to use the Trustee toolkit.
Who can help you
- Association of Member Nominated Trustees: supports the development of member-nominated trustees so they can perform their role to the best of their ability.
- Pensions Management Institute: supports and develops those responsible for running the UK’s pensions. Also provides a wide range of professional qualifications and training for those in the pensions industry.
- Pensions and Lifetime Savings Association: represents and supports pension schemes and those who provide them with advice. Also provides pension training courses, including training for trustees.
- Trades Union Congress: has a network of trade union member nominated trustees which is free to join. Also provides a free quarterly newsletter to the network and holds an annual trustee conference open to all.
- MoneyHelper: provides free information, advice and guidance on pensions for scheme members.