When making decisions, trustees are required, among other things, to: • act in the best interest of scheme beneficiaries • act for a proper purpose • have a level of knowledge and understanding of pensions law • take into account all relevant factors, while disregarding matters that are irrelevant. When trying to apply this principle in practice, trustees must consider: ◦ what constitutes a relevant factor, and ◦ 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 v Hope (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 sole corporate 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

Since 6 April 2015, trustees of relevant schemes (described below) are required to assess the value for members (VfM) of their scheme. This duty initially focused on an assessment of the value of charges borne by members, but with effect from the first scheme year ending after 31 December 2021, this duty was extended to include a calculation of investment returns, and for smaller relevant schemes (ie schemes holding assets of less than £100m), a benchmark assessment against comparator schemes. This duty is set out in regulation 25 of the Occupational Pension Schemes (Scheme Administration) Regulations 1996, SI 1996/1715 (the Scheme Administration Regs). Independent Governance Committees (IGCs) of workplace personal and stakeholder pension schemes are placed under an equivalent duty to assess VfM in respect of member charges under the FCA Handbook. For further information, see: Equivalent duty placed on IGCs of workplace personal and stakeholder pension schemes below. Steps are being taken to reform the VfM duty, with the acronym VfM to stand for ‘value for money’ rather than ‘value

Pensions analysis: The Pensions Ombudsman has rejected a complaint about the distribution of surplus in a defined benefit pension scheme. Martin Scott of gunnercooke LLP looks at the decision.

A term used by the Charity Commission to describe a person, not being a charity trustee, in whom legal title to the property of a charity is vested.

The insolvency practitioner who is charged with the realisation of the assets of a bankrupt for the benefit of such bankrupt's creditors.

Trustee in bankruptcy’s remuneration The trustee in bankruptcy (trustee) will usually look to the estate for their remuneration. The remuneration of the trustee is an expense of the bankruptcy payable according to the waterfall provided for in the Insolvency (England and Wales) Rules 2016 (IR 2016), SI 2016/1024 before any distribution is made to any creditor. Where the estate is insufficient to cover the trustee’s remuneration and the trustee has expended skill and labour on assets held by the bankrupt on trust for others, it may be possible to recoup remuneration for that activity from those trust assets. However, that is dependent on the discretion of the court (see Re Berkeley Applegate). In Bell v Birchall, the court refused to allow a trustee appointed over the bankruptcy estate of a solicitor to recover his costs and expenses incurred—and to be incurred—in connection with storing the solicitor's practice files and the reconciliation of sums held in the practice's client accounts. The solicitor's bankruptcy did not absolve him of his obligation to conduct an

Other protections available to trustees Despite dire warnings about the onerous nature of trusteeship, the liabilities imposed by the Pensions Regulator and the pitfalls inherent in trusteeship, pension trustees generally enjoy a high level of protection under both statute and the governing documentation of their pension scheme. This includes: • the Trustee Act 1925, s 61 under which a trustee may be relieved of liability for breach of trust if they have acted honestly and reasonably and ought fairly to be excused from that breach • the Trustee Act 1925, s 27 (TA 1925) which, by means of a notification arrangement, protects trustees from unknown beneficiaries on a scheme wind up • exoneration clauses in trust deed and rules which exempt trustees from personal liability for certain acts or omissions • indemnity clauses in trust deed and rules which ensure that certain liability claims against trustees are met by another party or source • indemnities by the plan sponsor Trusteeship undertaken via a company enjoys a further layer of protection under the Companies Act 2006. By

In Cowan v Scargill, the plaintiffs opposed the proposed policy of permitting limited investment overseas and investment in energy industries which competed with coal, the same industry as the members pension scheme. The High Court held that trustees had a duty to exercise all powers in the best interests of the beneficiaries under the trust when the purpose of the trust was to provide financial benefits to the members.

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 means that trustees who do not take appropriate advice and ensure that they have appropriate knowledge and skills 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). Forms of

Forms of protection • Trustees can be protected from personal liability by: ◦ exoneration clauses ◦ indemnity clauses ◦ insurance ◦ statute Exoneration clauses • An exoneration clause, if effective, will mean that a trustee is exonerated (ie not personally liable) for acts or omissions which are covered by the clause. • Trustees should ensure that an exoneration clause is worded as widely as possible. • Exoneration clauses are construed strictly. • The burden of proof is on trustees to show that an act or omission is covered by the clause. • Exoneration

Introduction Attendees [list attendees] Apologies [list any apologies] Introductory words about the meeting Investment performance The

Introduction Minutes of a meeting held at [place] on [date] of the trustees of the [name] Trust established on [date] by [name]. Attendees [list