Running a pension scheme

Pension trustees' role and responsibilities

Trustees hold a scheme's assets for the potential recipients and must act independently of the employer, for the benefit of scheme members. Trustee powers are contained in the trust deed and the scheme's rules.

Trustees are normally appointed by the employer or by existing trustees, or in accordance with the trust deed. Most schemes must have at least one third of the trustees (or directors) nominated by the members. Scope for opting out of this requirement is to be abolished from April 2006.

A trustee must be over 18 years and can be:

• a scheme member
• an employee
• a professional trustee
• the employer
• a business associated with the scheme
• a professional trustee company

If an employer is a trustee of the business' pension scheme, it must act in the interests of the scheme's beneficiaries, not from the business' perspective.

Trustees cannot be removed by the employer but can be removed by the other trustees, the pensions regulator (formerly Opra), or a court in line with the Trustee Act 1925.

For most types of schemes trustees have a legal duty to:

• register a scheme, take decisions and pay the annual general levy to the pensions regulator and, if eligible, the Pensions Protection Fund levies
• hold and take records of meetings, decisions and transactions
• keep financial and member records
• keep scheme assets separately from the business' assets
• appoint professional advisers
• obtain an auditor's statement and actuarial certificate
• approve and file the annual report within seven months of the scheme year-end date
• take investment decisions (in accordance with the statement of investment principles) and appoint advisers for some investments
• provide information to members, beneficiaries and prospective members
• sort out member disputes

Trustees can be personally and jointly liable for scheme losses and subject to fines imposed by the pensions regulator if they fail to comply with legislation.

The Pensions Act 2004, requires trustees to be trained, and have a clear understanding of their role and performance. The Act also establishes that members will eventually have the right to elect or appoint at least 50 per cent of trustees.

Read guidance on working with trustees at the pensions regulator website.

Subjects covered in this guide

• Introduction
• Regulations for setting up a pension scheme
• Pension trustees' role and responsibilities
• Running a pension scheme effectively
• Changes to a pension scheme
• Winding up a pension scheme
• Checklist for employers and pension scheme trustees
• Buying or selling businesses with pension schemes

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