The following Pensions practice note produced in partnership with Elizabeth Haggis of Excuria Law provides comprehensive and up to date legal information covering:
THIS PRACTICE NOTE APPLIES TO TRUST-BASED OCCUPATIONAL PENSION SCHEMES
Trustees may be subject to personal liability if they commit a breach of trust which causes loss to the pension scheme. This could occur because trustees:
act outside the powers in their scheme's trust deed and rules, or
do not comply with legislation or trust law
Trustees should ensure that there are adequate protections in place to protect them from personal liability. The increased complexity of pensions legislation makes it more likely that trustees will make mistakes when running pension schemes.
Directors of a trustee company are generally regarded as having a greater degree of protection from personal liability than individual trustees. In the absence of dishonesty, the court is unlikely to allow a claim against the directors for breach of trust by the trustee company principally due to the operation of the ‘corporate veil’, as discussed further below (see: Protection for directors of trustee companies).
Trustees can be protected from personal liability by:
The trust deed and rules of most schemes contain an exoneration clause and many also include an indemnity clause in favour of the trustees. The indemnity clause may entitle the trustees to be indemnified from the employer or out of scheme funds. Some trustees also have additional protection under an insurance policy, with the premiums paid by the
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