Trustee decisions and the Pension Protection Fund
Produced in partnership with Wyn Derbyshire of gunnercooke LLP
Trustee decisions and the Pension Protection Fund

The following Pensions practice note produced in partnership with Wyn Derbyshire of gunnercooke LLP provides comprehensive and up to date legal information covering:

  • Trustee decisions and the Pension Protection Fund
  • The Ilford case—the facts
  • The Ilford case—the judgment
  • Impact on duty to act in best interest of scheme beneficiaries
  • Impact on duty to consider relevant factors and disregard irrelevant ones
  • General rule—PPF not relevant factor
  • General rule—scope
  • Circumstances where PPF is a relevant factor
  • Safest course of action for trustees
  • Impact on duty to act for proper purpose
  • More...

When making decisions, trustees are required, among other things, to:

  1. act in the best interest of scheme beneficiaries

  2. act for a proper purpose

  3. have a level of knowledge and understanding of pensions law

  4. take into account all relevant factors, while disregarding matters that are irrelevant. When trying to apply this principle in practice, trustees must consider:

    1. what constitutes a relevant factor, and

    2. the extent to which the trustees can (or should) take such a factor into account

For further information on trustee duties, see Practice Note: Duties of pension trustees.

These issues became the subject of the High Court case, Independent Trustee Services Ltd v Hope [2009] EWHC 2810 (Ch) (the Ilford case), which concerned the relevance of the Pension Protection Fund (PPF) in the trustees’ decision-making process.

The Ilford case—the facts

Independent Trustee Services Ltd was the trustee of the Ilford pension scheme, a defined benefit occupational scheme sponsored by Ilford Ltd (Ilford). Ilford entered into administrative receivership, an event which did not constitute a qualifying insolvency event at the time, for the purpose of possible entry into the PPF. However, the trustee (Ilford’s principal unsecured creditor) was able to initiate the liquidation of Ilford in August 2007, which constituted a qualifying insolvency event and triggered a PPF assessment period.

The trustee was faced with the likelihood that the scheme would eventually enter the PPF, its assets

Popular documents