Trusteeship explained: What a trustee board does
The trustee board is responsible for operating the pension scheme in the interests of members
The trustee board’s powers for operating the pension scheme are set in the trust deed. These include powers to:
◆ appoint and remove trustees
◆ amend the trust deed
◆ allow associated companies to be admitted/leave the scheme
◆ set employer and employee contribution levels and deal with surpluses and deficits
◆ invest the assets of the fund
◆ arrange actuarial valuations and investigations
◆ wind up the scheme.
The trust deed needs to be flexible to allow for amendments, which in practice will be to respond to new legislation or administrative changes. Material changes must be submitted to Revenue & Customs to maintain the scheme’s tax status.
Chair of the board of trustees
The chair may be nominated by the employer or by trustees, and is responsible for planning and conducting board meetings. He/she should encourage all trustees to participate, keep discussions to the point and bring them to a firm and clear conclusion. The chair also needs to be accessible between meetings to deal with trustees’ and sometimes members’ concerns, to ensure minutes are distributed and that action points are followed up. The chair may also have responsibility for dealing with succession issues, selection of new trustees, balancing knowledge and skills within the trustee body and overseeing trustee training. The chair may also set up sub-committees to oversee specific issues.
The role of sub-committees
There is a wide variety of governance structures for pension schemes. Many, especially larger, schemes opt to use sub-committees to investigate particular aspects of the scheme that the full trustee board does not have time to manage, or that require specialist knowledge in a particular area. The board may charge the committee to look into, say, the governance of the scheme. The committee reports back to the main board, which then implements its proposals. Committees may have some power to make decisions on behalf of the board.
Trustees are usually chosen to sit on particular committees because they already have specialist knowledge. For example, someone from the finance department may sit on the investment committee. All trustees have a duty to understand the recommendations of the sub-committee – they are just as liable for the outcomes of them.