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Home > Powers of Delegation and Responsibilities of Trustees

8.0 Introduction

This section covers:

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appointment, resignation and roles of advisers (types of advice and written terms)

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other matters of delegation (day-to-day administration, etc.)

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Trustees’ responsibilities (including HMRC requirements), and 

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internal controls – Code of Practice.


Comment

Appointment of professional advisers and administrators

This section outlines the responsibilities of trustees in relation to their powers of delegation.

Since 6 April 1997, trustees (not the employer) have had sole responsibility for appointing the scheme’s advisers (the auditor, actuary, fund managers and legal adviser being the main ones). Where scheme rules say otherwise, they have been over-ridden.

Appointments of advisers must be in writing. Written agreements generally help to ‘ring-fence’ those who are working for the trustees and should reduce scope for conflict between the trustees and those appointed to help the trustees.

Trustees who place reliance on information provided to them by advisers could be in trouble where no formal appointment in writing exists. This includes staff working for the employer (those in the company’s legal department/HR department who from time to time may assist, or undertake duties for, the trustees e.g. the secretary to the trustees).

Trustees are expected to appreciate when they are required to employ the services of advisers and providers in order to ensure decisions and functions are properly executed. Trustees should also know the role and duties of the required adviser and also the best use of the candidate being considered for appointment. The whole of the selection procedure (leading up to any ‘beauty parade’ interviews) should take into account the skills, qualification and appropriateness of the prospective firm to be appointed and the individual within the firm who would be responsible for giving the advice.

The Pensions Regulator recommends that trustees review the appointments of all their advisers on a regular basis. Although not a legal requirement, it is a sensible one, and if something goes wrong and the Regulator discovers that any advisers involved have not been reviewed for a long period, the trustees might be held partly to blame.

In a DC scheme, the trustees are required to carry out an assessment, at least annually, of the value of the scheme to members. This will include the value to members of the services provided by advisers to the scheme.

In a DB scheme it is good practice, encouraged by The Pensions Regulator, to review regularly the value that the scheme’s advisers are giving.

Conflicts of Interest

If there is any possibility of any potential adviser having a conflict of interest, Trustees should choose an adviser who is entirely independent of any trustee and of the employer, its directors and senior executives.

In respect of schemes in winding up (or where the employer’s covenant is weak), it is essential that the appropriate skill sets and experience are available from the appointed advisers and that the adviser confirms whether any possible conflicts of interest exist.

Making Decisions – General principles

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Ensure that the decision is taken by a properly authorised person.

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If the decision is to be delegated, check that the proposed delegation is permitted by the powers in the scheme’s documents.

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Ensure that the decision maker has all the necessary information.

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Ensure that the recipients of the decision are regularly kept informed of the progress of matters that are of concern to them.

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Make sure that a proper decision is reached, complying with the law and applying the facts of the case.

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Take the decision at the proper time.

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Take proper steps to implement the decision.

Source: How to avoid the Pensions Ombudsman, issued by the Pensions Ombudsman













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