Trusts are often used by employers as the legal framework for establishing pension schemes to provide benefits for their employees on retirement and death. The main reason is to provide security for members' benefits: under a trust, the scheme assets are separate from the assets of the sponsoring employer and can only be returned to the employer in limited circumstances (eg if there is a surplus of scheme funds).
The scheme's governing documentation, in the form of its trust deed and rules, contains the terms of the trust. When a scheme is established, trustees are appointed to operate the trust in accordance with its trust deed and rules.
Trustees can be individuals acting in a personal capacity or companies set up for the specific purpose of acting as trustee. Where a company acts as trustee, the directors of the company effectively carry out the company's trustee functions on its behalf.
In general, a scheme will be run by a group of individual trustees or by a company as sole trustee. However, it is also becoming more common for professional, independent trustee companies to be appointed alongside...
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