Pension Trustee Frequently Asked Questions

A pension trustee is someone who technically holds an occupational pension scheme’s assets for the beneficiaries and is entrusted to make investment decisions in the best interests of scheme members. They act separately from the employer and their powers are written in the trust deed and the scheme’s rules.

Generally, anyone aged 18 years and over, and legally capable of holding property, is eligible to be a trustee.

Essentially, a pension scheme trustee’s duties are to: 

• hold the trust assets;
• invest the assets in accordance with the terms of the trust, and prudently;
• collect the contributions as required by the terms of the trust;
• pay the benefits in accordance with the terms of the trust.

The Pensions Regulator (TPR) makes sure that workplace pension schemes are run properly so that people can save safely for their later years. TPR has lots of important guidelines and regulations that trustee must follow, which can be found on its website Trustees – Trustee toolkit, online learning, guidance and resources | The Pensions Regulator

Your pension scheme will let you know if there are vacancies for a member nominated trustee and details of the application process. The role of a pension scheme trustee carries significant responsibilities as, along with fellow trustees, you are entrusted with safeguarding the benefits of all the scheme’s beneficiaries. The decisions trustees make will hugely influence member outcomes, ultimately impacting the lives of scheme members. 

A significant time commitment is required to take on the role of a trustee. You will need to prepare for, and attend, regular trustee meetings, possible four times a year for full meetings and perhaps other sub-committee meetings.

You will need to understanding how your scheme works, including the rules that govern it and act responsibly, honestly and prudently in the best interests of scheme members. You will also have to complete The Pension Regulator’s Trustee Toolkit within six months of becoming a trustee, and maintain and update this knowledge and understanding on a regular basis. However, becoming a trustee can be a very rewarding experience as it is an opportunity to help others and make a difference.

In the UK, most member-nominated trustees are unpaid, attending meetings and training sessions alongside their day job, with expenses covered. The largest pension schemes will require more commitment from their trustees and may offer some remuneration. All payments are subject to tax and National Insurance.

Almost all pension scheme rules include a rule which says the scheme trustees are not held personally responsible (“not liable”) if they make a mistake; the scheme bears any loss that results from the trustees’ actions.

If there are a number of individual pension scheme trustees, they will form a trustee board to make decisions about the scheme. Alternatively, the trustee may be set up as a company, with a board of directors, made up of the individual trustees, which may include member nominated trustees and a professional independent trustee.

The trustee board will make decisions and set the scheme’s objectives and strategy. It will effectively monitor and oversee advisers and those carrying out scheme activities and foster an open and constructive relationship with the sponsoring employer to understand their views and risks.

The Pensions Regulator will consider a professional trustee ‘to be a person whose business includes trusteeship Professional pension trustee standards | The Pensions Regulator.

Someone will normally be considered a professional trustee if they have represented themselves to one or more unrelated schemes as having expertise in trustee matters generally (rather than just in certain areas).’

They are unlikely to be considered to be a professional trustee if both a. and b. below apply.

They have been either:

1. a member of the pension scheme or a related pension scheme
2. employed by, or a director of, a participating employer in the pension scheme

A sole trustee is a single entity appointed to govern a pension scheme. A sole trustee can be an individual, or a professional trustee company, and is appointed instead of a full trustee board. Sole trustee appointments are becoming increasingly popular as they allow for quicker decision making, and mean the sponsoring employer can spend more time running the business rather than running the pension scheme.

To work effectively, the sole professional trustee should be represented by a minimum of two experienced professionals to ensure diversity of skills, experience, and perspective in decision making and good governance. Issues are discussed by the sole professional trustee team, with appropriate peer review processes in place, along with effective internal controls.

Sole trusteeship means sponsors are delegating, not abdicating, responsibility. Ongoing engagement at a senior level between the sponsor and sole professional trustee is vital to make the arrangement work effectively.

The Pensions Regulator expects professional trustees to be able to demonstrate that they have sufficient expertise, knowledge and skills to perform the role, and has published minimum standards that they expect professional trustee to meet.

Professional trustees can prove they meet these standards by completing the  accreditation framework established by the Association of Professional Pension Trustees (APPT (Association of Professional Pension Trustees) or gaining the award in pension trusteeship from the Pensions Management Institute Award in Pension Trusteeship – The Pensions Management Institute (pensions-pmi.org.uk).