trustee act 2000 statement of investment principles and practices

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Trustee act 2000 statement of investment principles and practices fusion investment

Trustee act 2000 statement of investment principles and practices

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Trustees must establish, operate and maintain adequate internal control mechanisms for the purpose of monitoring that the scheme is being effectively administered and managed in the interests of the members and beneficiaries under the scheme rules. This section of the guidance explains the principal aspects of scheme administration that, as a trustee, you must be aware of:.

You can learn more about these topics in the Trustee toolkit. The trust deed and rules may tell trustees how to manage the scheme, including matters such as how to make decisions. For example, if the scheme documents say that decisions must be made in a trustees' meeting and agreed by at least two-thirds of trustees, you must keep to this rule. If these matters are not set out in the scheme documents, you can usually agree your own working methods.

Pensions legislation provides that:. You must keep proper records for running the scheme effectively. These include records of your trustee meetings, and records about scheme members and transactions. You must also make sure that you keep proper written records about scheme members and transactions so that you pay out the right benefits at the right time. You need clear and accurate details of transactions to and from the scheme and up-to-date information about its past and present members.

You also need this information to be able to satisfy your other duties as a trustee — for example, to be able to account to HM Revenue and Customs for any tax due or deducted from benefits paid, to obtain an auditor's statement and to prepare your annual report. For more information, see our record-keeping guidance. You are responsible for making sure that proper records are kept, even if an insurance company or other administrator carries out the record keeping for you.

You must keep the records for at least six years from the end of the scheme year to which they relate. In practice many trustees keep these and other records for much longer. You must make the records, and any other relevant information, available if the scheme's professional advisers request them so they can carry out their duties. You need to make sure that, as a trustee, you have all the original documents and records relating to the scheme, for example:.

Scheme records are trustee property; they do not belong to the employer. All these documents are open to review and inspection by all the trustees. Should both you and the employer need a document, the original should stay with the trustees and a copy be given to the employer.

If, as is sometimes the case, the employer is the only trustee, trustee documents should be kept separate from company documents. Because they are often lengthy documents, it can be time-consuming and expensive to update them, and it is normal practice to make changes through separate amending deeds. This means that it can be difficult to keep track of the up-to-date position, particularly where there have been a lot of changes. It is good practice to bring together the changes into a single replacement document at least every five years.

You should also update any literature issued to members at the same time, to maintain consistency in the information given about the scheme. If the trust deed and rules are to be amended, you must act in line with the scheme's power of amendment and pensions law. Usually the power to do so rests with the employer and the trustees must agree its use. You must follow the procedure laid down or the amendment may not be effective. You must also comply with the law when considering changes which affect benefits already earned by a member subsisting rights.

The Pensions Act requires that some changes to subsisting rights known as 'protected modifications' will always need the member's consent - for example, changing the type of benefit the member has already earned from a defined benefit to a defined contribution basis. If an employer has the power to make an amendment, as a trustee, you must agree to that amendment being made. Other 'detrimental modifications' require that either the member consents, or the scheme actuary has to confirm that the actuarial value of the replacement benefits is not less than the actuarial value of the original benefits.

You must tell the member that you have decided to make or agree to the amendment. You should be aware that the employer is required to consult certain employees when considering certain changes to the scheme. If the trustees have the power to make amendments you must notify the employer of your proposed amendment and ensure that no changes are made until the employer has carried out the necessary consultation. The trustees of most pension schemes need to get a statement every year from the scheme auditor confirming whether or not, in the auditor's opinion, contributions have been paid in line with the scheme's payment schedule or schedule of contributions.

For many schemes, the scheme auditor will also need to audit the scheme accounts. The accounts usually form part of your annual report about the scheme. The scheme auditor will audit the accounts that you have prepared, or that have been prepared for you by your adviser. The accounts must include a report saying whether, in the scheme auditor's opinion, the accounts show a true and fair view and whether they contain specific information set out in law, including a statement that they have been prepared in accordance with the most recently applicable version of the Statement of Recommended Practice SORP 'Financial Reports of Pension Schemes' and to indicate any material departures from its guidance.

The SORP indicates best practice in accounting and financial reporting by pension schemes and supplements the general accounting principles set out in FRS As a trustee, you will have to approve the audited accounts, and the scheme auditor must sign the report. This must be done within seven months of the end of the scheme year.

The trustees of most pension schemes have to make information available about the scheme, including how it is run and the benefits that it provides. The people listed above can usually ask for general information about the scheme and the benefits it provides, free of charge, once in any month period.

New members should be given this information automatically when they join the scheme. You also need to provide information to individuals on other occasions either automatically or if they request it — for example, when a member retires, dies or leaves the scheme. Sometimes scheme events will trigger the need to give information - for example, certain information must be sent out when a scheme starts to wind up or members are being transferred to another scheme without their consent.

The trustees of most schemes must make their annual report available within seven months of the end of each scheme year. This is a report on how the scheme has been managed and any changes which have happened in the year. It includes changes to the benefits provided by the scheme as well as changes in who is involved in running the scheme. Trustees of most schemes must have a formal arrangement in place for considering complaints about their scheme.

This is known as the 'internal dispute resolution' IDR procedure. You must tell scheme members about it. The law does not prescribe the internal dispute resolution procedure to be adopted by trustees. Trustees can decide on a procedure that best suits the requirements of their scheme. The law simply states that the trustees must make a decision on a matter in dispute and communicate it to the applicant within a reasonable period. It is good practice to review your IDR procedure regularly, to make sure that it is being administered properly and is working effectively.

The person making the complaint can contact the Pensions Ombudsman at any time about their complaint. Occasionally, trustees may have to deal with unusual events such as wind ups or situations arising from corporate activities. Pension schemes may be wound up for a variety of reasons. The most common is when an employer becomes insolvent and stops making contributions to the scheme. In this situation the trust deed and rules will usually state that the scheme should be wound up.

You must check the trust deed and rules if you are unsure about whether the scheme should be wound up. As a trustee, you are responsible for ensuring that the scheme assets are identified and protected, and that the wind up is completed as quickly as possible. The government published a report in Speeding up winding up occupational pension schemes that stated it was reasonable to expect that the key activities of winding up will be completed within two years.

The key activities include:. During a scheme wind up members may be feeling anxious and it is important that you keep them informed about what is happening. The law states that you must advise them that the scheme has started to wind up within one month of taking the decision and then update them of progress annually thereafter.

Most of the duties we have outlined in this guide continue to apply even if a scheme is being wound up. There are also specific duties and powers that come into play when a scheme is winding up. For example, you have a duty to tell The Pensions Regulator:. For more information, including good practice examples, see our guidance on winding up. You can learn more about these topics in the Trustee toolkit in the additional learning modules to help trustees in special situations.

If the employer becomes insolvent, an insolvency practitioner, or the official receiver acting as the receiver or liquidator, is likely to be appointed to act for the employer. By law they must tell you, The Pensions Regulator and the Board of the Pension Protection Fund that they have started to act for the employer. In this situation, The Pensions Regulator has the power to appoint a statutory independent trustee from our register of independent trustees. Although the existing trustees will still be required to carry out their duties, the statutory independent trustee will take over the exercise of their discretionary powers.

Where you are a trustee of a scheme with a defined benefit element and your employer suffers an insolvency event your members may be entitled to compensation from the Pension Protection Fund. The scheme will pay additional levies to cover the cost of the fund. You will need to check whether you satisfy the qualifying conditions for entry. As a trustee you should establish procedures for monitoring the possibility of an event occurring that has an actual or potential detrimental effect upon the pension scheme.

The section working with the employer tells you how to go about this. It is a complex area and trustees should avoid potential conflicts of interest and seek appropriate professional advice to help them. If an event is identified you should take appropriate action to seek mitigation for its detriment effect.

Examples of mitigation may include obtaining additional cash or contingent security for the scheme. If a detrimental event of this type is identified trustees should be aware that The Pensions Regulator expects the employer to make a clearance application. Trustees should also be aware that some events may be notifiable events. If an ongoing defined benefit scheme is in surplus the employer may ask for the surplus to be paid to him. Trustees are only able to authorise a payment to an employer if they have obtained a written valuation from the actuary and this shows that the scheme is funded to above full buy-out level.

If as a trustee you agree to the employer's request, the law requires you to notify the members of the potential payment and inform The Pensions Regulator when the payment is made. A surplus may also arise in a defined contribution scheme when all the liabilities in respect of a member, beneficiary or his estate have been secured by the purchase of insurance policies, or paid in full.

This surplus may be paid to the employer without the need to notify the members or the regulator. Pension schemes located in one EU member state must apply for authorisation and approval to accept contributions from employers employing members who are subject to the social and labour law of another EU member state.

As a trustee of a scheme with its main administration in the UK, you need to decide whether you have European members; that is a member who is working in another EU state but who is not seconded overseas. If you do, and you want to accept contributions into the scheme in respect of them you will need to apply to The Pensions Regulator for authorisation and approval for your scheme. We're carrying out research to help us improve our codes of practice and guidance for trustees, scheme advisers and public service schemes.

To get involved, please complete our five-minute survey. Your browser is out of date, and unable to use many of the features of this website Please upgrade your browser. This website requires javascript. Your browser currently has javascript disabled. Please enable javascript to ensure you can use this website to its full extent. This website requires cookies. Your browser currently has cookies disabled. Home Document library Regulatory guidance Trustee guidance.

Trustee guidance. Guidance Our guidance for trustees outlines some of the wide-ranging responsibilities placed on pension scheme trustees and some of the powers they usually have Issued: December Key points This guidance provides a detailed overview of the role for newly appointed trustees, those thinking of becoming trustees and those simply interested in finding out more about what being a trustee involves. Employers may also find this guidance a useful explanation of the trustee's role.

Before reading this guidance, trustees should be aware of the legal requirements for trustee knowledge and understanding. This guidance complements our Trustee toolkit , setting out useful information with links to related guidance on our website, which those who have completed the toolkit will find useful. Trustee knowledge and understanding The law requires that trustees have knowledge and understanding of among other things the law relating to pensions and trusts, as well as the principles relating to the funding of pension schemes and the investment of scheme assets.

Trustee toolkit New trustees must acquire the appropriate knowledge and understanding within six months of being appointed. Introduction In becoming a trustee of an occupational pension scheme, you are choosing to take on an extremely important role. This section of the guidance looks at the following: What is an occupational pension scheme? What is a trustee? Who can be a trustee? The legal background The Trustee toolkit covers this section in three modules: 'Introducing pension schemes', 'The trustee's role' and 'Pensions law'.

What is an occupational pension scheme? Main types of occupational scheme Occupational pension schemes in the UK are usually defined by the type of benefit they provide. There are three main types: defined benefit schemes sometimes known as 'salary-related' or 'final salary' schemes ; defined contribution schemes sometimes known as 'money purchase' schemes ; and hybrid schemes mixture of defined benefit and defined contribution benefits. Other types of pension scheme Other ways in which employers can provide retirement benefits for their employees include: setting up a group personal pension scheme; and offering a stakeholder pension scheme.

Types of trustee If you are an individual trustee, you will usually be one of several trustees responsible for running the scheme; this group is often referred to as a board of trustees. Where the trustee is a company known as a corporate trustee , you will be a director of that company. However, you will have the same responsibilities as an individual trustee in relation to the scheme.

The employer itself may be the corporate trustee. Some individual trustees, or directors of a trustee company, will be nominated to be trustees by at least the active and pensioner members of the scheme. Some individuals volunteer to be trustees and start with little knowledge or experience of what being a trustee involves. Often they will also be members of the scheme, employees of the sponsoring employer, or both.

Others are professional trustees who are paid for their services. Disqualification A person is disqualified from being a trustee if: they are convicted of an offence involving dishonesty or deception unless the conviction is spent ; they are an undischarged bankrupt, or have entered into certain other voluntary agreements with creditors; they have been disqualified from acting as a company director; they have property in Scotland which is covered by a sequestration order; the person is a company and any director of the company has been disqualified from being a trustee; or the person is a Scottish partnership and any of the partners has been disqualified from being a trustee.

Scheme auditors and actuaries Other than in a few exceptional circumstances anyone acting as an auditor or actuary of the scheme cannot be a trustee of the scheme. Prohibition The Pensions Regulator can prohibit a person from being a trustee of a scheme or schemes if we are satisfied that the person is not 'fit and proper' to act as a trustee. The legal background Trustees must act within the framework of the law.

There are several types of law affecting occupational pension schemes, in particular: the general law of trusts; and specific UK law applying to pension schemes, including Acts of Parliament and regulations supported by the codes of practice issued by The Pensions Regulator. Variations within the UK References to pensions law in this guidance are to the law as it applies in England, Wales and Scotland.

European law European law implemented by UK legislation and decisions of the European Court of Justice may also have an effect on pension schemes. The law of trusts The law of trusts has developed over many years through Acts of Parliament and through case law. UK law applying to pension schemes Pension schemes are affected by specific legislation, including Acts of Parliament, and regulations. The Pensions Act reinforces trust law affecting how schemes should be run and increases the security of members' benefits.

The Pensions Act builds on this with the aims of further improving the security of members' benefits and standards of scheme administration, and strengthening the scheme funding requirements. Both Acts give trustees additional rights and duties, which we outline in this guidance.

Codes of practice The Pensions Regulator has to issue codes of practice about certain requirements of the Pensions Act , and may issue other codes if it wishes. The trustees' duties and powers Many of your duties as a trustee arise from trust law. This section of the guidance describes the main fiduciary duties and outlines the types of power available to you: Acting in line with the trust deed and rules Acting in the best interests of the scheme beneficiaries Acting impartially Acting prudently, responsibly and honestly The trustees' powers You can learn more about this topic in the Trustee toolkit tutorial 'Duties and powers' in the module 'The trustee's role.

Acting in the best interests of the scheme beneficiaries As a trustee you must always act in the best interests of scheme beneficiaries. Who are the beneficiaries? Scheme beneficiaries can include: active members — employees who are building up benefits in the scheme; pensioner members — people who are receiving a pension from the scheme; deferred members — people who have left the scheme, but who still have benefits in it for example, because they have not transferred all their benefits to another pension arrangement ; prospective members — people who, if they go on to meet the eligibility conditions, may be entitled to join the scheme at a future date; widows and widowers of members; dependants of members — for example, their children or other relatives who financially depend on them; former husbands and wives of members who, as a result of a court order on divorce for example a pension sharing order have been granted pension credits within the scheme; and in some circumstances the employer who, for example, may be able to receive a payment from the scheme if there is a funding surplus or when the scheme is wound up.

Acting impartially As a trustee, you must consider the interests of all the classes of beneficiary covered by the trust deed and rules and act impartially. Acting prudently, responsibly and honestly This duty will touch on many aspects of your work as a trustee. Conflicts of interest Conflicts of interest is a legally complex area and legal advice should be sought and conflicts managed.

Acting prudently The duty to act prudently means you must act in the way that a prudent person would in their own affairs. Reaching decisions When deciding whether to exercise a power you must consider the circumstances impartially, take account of all the relevant facts ignoring all the irrelevant facts and reach a reasonable decision.

Personal profit You must not make any personal profit at the expense of the fund. The trustees' powers The trust deed and rules give the trustees powers, some of which will be discretionary. Trustees' powers differ from scheme to scheme, but usually the trust deed includes the power to: accept contributions into the scheme; decide the investment strategy and invest the scheme's assets; amend the rules of the scheme; admit members on special terms; increase or 'augment' members' benefits; deal with a funding surplus; and wind up a scheme.

Discretionary powers A discretionary power allows the trustees a choice, for example to decide: who will receive a dependant's pension; who will receive a lump-sum death benefit; whether to pay a pension on early retirement; and whether to accept a transfer into the scheme. When considering whether to use a discretionary power, you should: check the limits of the power in the trust deed and rules; follow any procedures set out in those documents; ask for, and consider, all relevant information ignoring irrelevant information before reaching a reasonable decision; and take advice from your legal adviser if you have any doubts or concerns about using the power.

Delegating powers You cannot usually delegate your powers, including your discretionary powers, unless the trust deed and rules allow you to do so. Your liability Trustee boards work effectively by: following the requirements — and keeping within the restrictions — of the law and their scheme documents; and taking regular advice from their advisers before making decisions about changing circumstances and more complicated issues. This section of the guidance explains the following: What is a breach of trust?

Your liability as a trustee Protection from personal liability You can learn more about reporting breaches in the Trustee toolkit tutorial 'Trustee liabilities and protections' in the module 'The trustee's role'. What is a breach of trust? A breach of trust can happen when: you carry out an act as a trustee which you are not authorised to do under the trust deed and rules unless agreed by the court or directed by The Pensions Regulator ; you fail to do something which you should have done under the trust deed and rules; or you do not perform one or more of the duties that you have under trust law or pensions law or do not perform them with sufficient care.

Your liability as a trustee You could be personally liable for any loss which you cause to the scheme as a result of a breach of trust. Joint and several liability You and your fellow trustees have 'joint and several liability'. Breaches of trust that occurred before your appointment If you become aware of a breach of trust committed before you became a trustee of the scheme, you cannot just ignore it. Protection from personal liability The rules of your pension scheme might protect you from personal liability for a loss caused by breach of trust, except where it is due to your own actual fraud.

Using scheme assets If The Pensions Regulator or a court fines you as a result of a breach, you can neither pay the fine out of the scheme's assets nor use the scheme's assets to pay the premiums for a policy insuring you against fines. Indemnities and insurance It may be possible to obtain indemnity from the employer or insurance to cover you in case of a breach of trust.

Appointing and removing trustees This section of the guidance describes the requirements for appointing and removing trustees: Who has the power to appoint trustees? Member-nominated trustees and member-nominated directors Removing trustees Actions to take if you are removed as a trustee Who has the power to appoint trustees? Member-nominated trustees and member-nominated directors The law requires trustees to ensure that arrangements are in place, and implemented, that provide for at least one-third of trustees, or at least one-third of directors of a trustee company, to be member-nominated.

Following procedures set out in the trust deed The trust deed usually sets out how a trustee should retire or otherwise be removed. Actions to take if you are removed as a trustee If you are removed as a trustee, you should seek advice as to what action you need to take.

Working with the employer Trustees and employers each have a vital role to play in the proper running of their pension scheme. This section of the guidance provides information and advice on your relationship with the sponsoring employer: Keeping informed of the employer's plans Information that trustees, employers and professional advisers must share Upholding the interests of scheme members Protection against dismissal or victimisation Keeping informed of the employer's plans The cornerstone of a good working relationship between trustees and the sponsoring employer is clear and open communication.

For example, the employer should tell you about: future plans which are likely to significantly change the size of the workforce and the scheme membership, for example, mergers or redundancies; corporate restructuring that may affect the employer's ability to support the pension scheme; proposed changes to the scheme rules; proposed changes to members' benefits; and proposals to switch from a salary-related scheme to a money-purchase scheme, or vice versa.

Information that trustees, employers and professional advisers must share The law requires trustees, employers and professional advisers to share certain information. For instance: The employer and any previous employer involved with the scheme , and any actuary or auditor working for the employer, must give you any information that: you reasonably need as a trustee; or you reasonably need for your professional advisers. If the employer deals with the administration of the scheme for you, the information that must be made available includes: who administers the scheme; and the terms on which they do it.

The employer must tell you, within one month, if something happens which is likely to be of material significance to you or your professional advisers. Upholding the interests of scheme members As a trustee, your must protect the interests of beneficiaries. Protection for trustees against dismissal or victimisation It is against the law for a trustee to be dismissed or detrimentally treated for carrying out your duties or using your powers properly.

This section of the guidance explains the information you have to provide to help us to perform our role effectively: Providing information for the register and the scheme return Notifiable events Breaches of the law You can learn more about keeping us informed in the Trustee toolkit in the tutorial 'The Pensions Regulator' in the module 'Pensions Law'. Providing information for the register and the scheme return The Pensions Regulator keeps a register of pension schemes , holding information about the scheme and the employer.

Trustees must: provide The Pensions Regulator with the information required by law for the register for example, the address where we can contact each trustee ; and notify us of changes to the information. The scheme return The Pensions Regulator has a duty to issue a scheme return to all schemes on the register on a regular basis. The return asks for: the information needed for the register; and other information that we reasonably need to carry out our duties, for example, to assess the risks for each scheme.

Notifiable events Notifiable events are designed to provide a warning system. An example of a scheme-related event is two or more changes to the post of scheme actuary or auditor within 12 months. An example of an employer-related event is any decision by the employer to cease to carry on business in the UK. Reporting breaches of the law Trustees must report certain breaches of the law to The Pensions Regulator.

A report must be made in writing, as soon as reasonably practicable. Your advisers Running a pension scheme is a complicated business. This section of the guidance describes the various types of adviser and your relationships with them: Understanding the role of advisers Advisers required by law Appointing and removing professional advisers You can learn more about this topic in the Trustee toolkit in the tutorials 'Introducing advisers and service providers' and 'Appointing advisers and service providers' in the module 'Running a scheme'.

Understanding the role of advisers You should make sure you understand what help and advice you can expect from your different advisers and service providers — in particular, the type of advice they can, and will, give you and the limits of that advice. You can ask them, for example, whether they can: explain which parts of the law affect your scheme; help you comply with the law; in some instances, for example in relation to some aspects of scheme funding, you are required to seek the advice of an adviser before reaching a decision ; and tell you when and how to get more expert help.

Delegating trustee duties In some circumstances trustees are allowed to delegate their duties to suitably qualified people, but you still retain the overall responsibility for the actions taken. Conflicts of interest Where trustees appoint advisers to the scheme, it is important that they establish that any such appointment and subsequent advice is independent.

Your advisers' duty to report breaches of the law If any of your advisers, or anyone involved in the administration of the scheme, reasonably believes that there has been a breach of the law relevant to the administration of the scheme, and that this breach is likely to be of material significance to The Pensions Regulator, they have a legal duty to report it to us. Advisers required by law The Pensions Act requires the trustees to appoint certain 'professional advisers' to carry out specific tasks in relation to the scheme.

The principal types of professional advisers, and their roles, are described below. The scheme auditor Nearly all schemes must have a scheme auditor to: prepare the auditor's statement about the contributions payable to the scheme; and if required, audit the scheme's accounts.

The scheme auditor may be an individual or a firm. The scheme actuary Schemes with a defined benefit element must also have a scheme actuary to provide advice on all aspects of the funding of the scheme. This includes: advising before taking important decisions which relate to scheme funding such as on the content of the statement of funding principles or the schedule of contributions; certifying the calculation of the technical provisions; preparing actuarial valuations at least once every three years.

This places a value on the scheme's liabilities which can then be compared to the value of the assets; working out what contributions need to be paid to the scheme in future, after taking account of any surplus or deficit, and certifying the schedule of contributions; calculating transfers out of the scheme and for calculating members' benefits on transfers in; and advising you on the implications for scheme funding of events affecting the scheme, and on options for members' benefits.

Other professional advisers Your scheme may also need: a fund manager — to look after the day-to-day investment of the scheme's assets for you; a custodian to look after the scheme's assets; a legal adviser. Appointing and removing professional advisers You are legally required to formally appoint certain advisers. Appointing advisers The appointment of the scheme auditor, scheme actuary and any other professional advisers must be in writing.

The letter of appointment you send to the adviser must mention: the date the appointment begins; to whom the adviser will report; and who will give instructions to the adviser. Removing and replacing advisers You can remove an adviser by giving them written notice of when their appointment will end. Scheme funding One of your most important responsibilities is to make sure that the right money is paid into the scheme at the right time.

This section of the guidance describes your responsibilities, as a trustee, in ensuring that contributions are paid on time, and are sufficient for the requirements of the scheme: Handling employees' contributions Reporting late payments to The Pensions Regulator Drawing up a schedule showing the contributions due The DB statutory funding framework You can more about these topics in the Trustee toolkit in the modules 'How a DB scheme works', 'Funding your DB scheme', 'DB recovery plans, contributions and funding principles'.

Handling employees' contributions The law requires that employers must hand employees' pension contributions over to the trustees within 22 days or 19 days if the payment is by cheque of the end of the calendar month when they were taken from member's pay. Reporting late payments to The Pensions Regulator The Pensions Regulator focuses its efforts on matters that pose a real risk to members' benefits.

For more information, see our codes of practice on reporting late payments of contributions to: occupational pension schemes ; and personal pensions. Drawing up a schedule showing the contributions due The trustees of most types of scheme must draw up a schedule showing: the contributions that should be paid to the scheme; and the dates when contributions should be paid.

The DB statutory funding framework The existing statutory funding framework, which replaced the minimum funding requirement, came into force on 30 December Trustees' responsibilities The scheme funding provisions require the trustees to: prepare a statement of funding principles; obtain regular actuarial valuations and reports; put in place a recovery plan addressing any funding shortfall; and keep scheme members informed about their scheme's funding position by issuing regular summary funding statements.

Powers of the regulator The Pensions Regulator has specific powers to intervene and help put matters right where the trustees or actuary are unable to meet their obligations under the scheme funding requirement.

This includes the power to: modify future accrual of benefits; direct how technical provisions are to be calculated; direct the period within which, and how, any failure to meet the statutory funding objective is to be remedied; and impose a schedule of contributions. Scheme investments A pension scheme has long-term liabilities. Setting the investment strategy The trustees of most schemes are responsible for deciding the investment strategy to be adopted by the scheme.

When deciding upon an investment strategy you must consider: any limitations on investments contained in the trust deed and rules, and other legal requirements; your fiduciary duty to choose investments that are in the best financial interests of the scheme members — for example, you must not let your ethical or political convictions get in the way of achieving the best returns for the scheme, the suitability of different asset classes to meet the needs of the scheme and future liabilities; the risks involved in different types of investment and the possible returns that may be achieved; and appropriate diversification of the scheme's investments — in other words not 'putting all your eggs in one basket'.

Drawing up a statement of investment principles The trustees of most schemes must draw up a written statement of investment principles SIP. What the SIP must include The SIP must include your policy on: choosing investments; the kinds of investments to be held, and the balance between different kinds of investment; risk, including how risk is to be measured and managed, and the expected return on investments; realising investments; the extent, if at all, you take account of social, environmental or ethical considerations when taking investment decisions; and using the rights including voting rights attached to investments if you have them.

Preparing the SIP Before the SIP is drawn up, you must: obtain and consider the written advice of a person who you reasonably believe to have the appropriate knowledge and experience of financial matters and investment management; and consult with the employer. Reviewing and revising the SIP You will need to review the SIP regularly - at least every three years and whenever there has been a significant change in investment policy.

Delegating day-to-day investment decisions Pensions law allows you to delegate day-to-day investment decisions, and sets out your responsibility for the decisions taken. Trustees' responsibilities If you delegate decisions to a fund manager, you must ensure that the fund manager is suitably qualified to carry out the scheme's investment business on your behalf.

The trustees should set up appropriate procedures to review: the fund manager's performance in accordance with the targets or mandate you have set them; and the fees and management charges they are levying. However, you are not personally liable for any mistake the fund manager makes as long as you have made sure that they: have the appropriate knowledge and experience for managing the scheme investments; and carry out their work competently and in line with your policy for choosing investments, as set out in the statement of investment principles SIP.

This includes exercising those powers: in a manner to ensure the security, quality, liquidity and profitability of the fund; in a manner appropriate to the nature and duration of the expected future retirement benefits of the scheme; having regard to the need for diversification in the choice of investments for the scheme; and making sure that the scheme assets are invested mainly in regulated markets.

Limitations on investing in the employer's business 'Employer-related' investments often called 'self-investment' include shares in the employer's business and acquiring property used in the business, such as the premises from which the business operates. Prohibited employer-related investments Certain employer-related investments are not allowed at all. These include: loans to the employer; guarantees over loans or other financial arrangements involving the employer and connected or associated people; transactions at less than their normal market value; and certain loan arrangements with third parties which involve the employer.

Holding scheme assets securely As a trustee, you have a duty to make sure that the scheme's investments are held securely on your behalf. Appointing a custodian If you plan to appoint a custodian to hold the scheme's assets, you should choose the custodian carefully after considering matters such as: what insurance arrangements the custodian has; and if the custodian uses sub-custodians to look after assets, how far will they guarantee the actions of those sub-custodians?

Administrative procedures Good scheme administration is vital to the proper running of a pension scheme. Taking decisions about the scheme Following the trust deed and rules The trust deed and rules may tell trustees how to manage the scheme, including matters such as how to make decisions. Agreeing your own decision-making procedures If these matters are not set out in the scheme documents, you can usually agree your own working methods. Pensions legislation provides that: If the trust deed and rules do not give details on how decisions should be taken, they may be made by a majority of the trustees.

The 'majority' is a majority of all the trustees, not just those at the meeting. You can also decide the minimum number of trustees who must be present the 'quorum' in order to make the business carried out at a meeting valid. Other provisions of the pensions legislation Pensions legislation also provides that: If a decision may be taken, all trustees must be given notice of the occasion which will usually be a trustee meeting stating the date, time and place, no later than 10 business days beforehand unless the trustees agree other arrangements.

If a decision has to be taken urgently, you do not have to give formal notice. Any decisions made between meetings must be included in the minutes of the next trustee meeting. Keeping records and holding original documents You must keep proper records for running the scheme effectively. Records of meetings You must keep written records of your trustees' meetings, showing the: date, time and place of the meeting; names of the trustees invited; names of the trustees and others, such as scheme advisers who were at the meeting; names of the trustees who were not at the meeting; decisions made; and date, time and place of any decisions made since the last meeting, including urgent decisions, and the names of the trustees who took part.

Records about members and transactions You must also make sure that you keep proper written records about scheme members and transactions so that you pay out the right benefits at the right time. The records you need to keep include: the date each member joined the scheme; details of the contributions received; all payments to and from the scheme; and details of transfers of members' benefits into and out of the scheme.

Trustees' responsibilities for availability of records You are responsible for making sure that proper records are kept, even if an insurance company or other administrator carries out the record keeping for you. Holding original documents You need to make sure that, as a trustee, you have all the original documents and records relating to the scheme, for example: trust deed and rules; bank statements; correspondence with your advisers; and the other records we cover in this guide.

Updating the trust deed and rules The trust deed and rules for your scheme may not always be up to date. Making changes to the trust deed and rules If the trust deed and rules are to be amended, you must act in line with the scheme's power of amendment and pensions law. A power of amendment will usually set out how a provision of the scheme can be amended. Obtaining an auditor's statement and audited accounts The auditor's statement The trustees of most pension schemes need to get a statement every year from the scheme auditor confirming whether or not, in the auditor's opinion, contributions have been paid in line with the scheme's payment schedule or schedule of contributions.

If the statement is negative or qualified, the scheme auditor must give reasons why. Audited accounts For many schemes, the scheme auditor will also need to audit the scheme accounts. The accounts must show a true and fair view of: the financial transactions of the scheme during the scheme year; the amount and disposition of the assets at the end of the scheme year; and the liabilities of the scheme, other than the liabilities to pay pensions and benefits after the end of the scheme year.

The auditor's report on the accounts The accounts must include a report saying whether, in the scheme auditor's opinion, the accounts show a true and fair view and whether they contain specific information set out in law, including a statement that they have been prepared in accordance with the most recently applicable version of the Statement of Recommended Practice SORP 'Financial Reports of Pension Schemes' and to indicate any material departures from its guidance.

Providing information to members and others The trustees of most pension schemes have to make information available about the scheme, including how it is run and the benefits that it provides. Who is entitled to information about the scheme? You should make information available to: members including active members, pensioner members and deferred members ; prospective members; the husbands and wives of members and prospective members; other people entitled to benefits under the scheme however, not all these people are entitled to see all the information described on this page ; and independent recognised trade unions.

When must information be provided? Producing the annual report The trustees of most schemes must make their annual report available within seven months of the end of each scheme year. The report must include, among other information: a copy of the audited accounts and auditor's statement; details of the trustees and how they are appointed and removed ; details of the scheme's professional advisers and fund managers; an investment report, including how the investments have performed; the number and breakdown of scheme members; the number of other people entitled to benefits under the scheme; details of pension increases for defined benefit schemes and how they are worked out; an address for enquiries; and the actuary's certification of the adequacy of the schedule of contributions.

Resolving disputes with scheme members Trustees of most schemes must have a formal arrangement in place for considering complaints about their scheme. The IDR procedure covers disputes between the trustees and: the members including pensioner members and deferred members ; prospective members; a widow, widower or someone else entitled to benefits as a result of a member's death; individuals who were recently in one of these categories; and individuals who claim to be in one of these categories.

Special situations Occasionally, trustees may have to deal with unusual events such as wind ups or situations arising from corporate activities. This section of the guidance describes your duties as a trustee in the following situations: The pension scheme starts to wind up There is an event that has a detrimental effect upon the scheme The pension scheme is in surplus The pension scheme is operating across EU borders The pension scheme starts to wind up Pension schemes may be wound up for a variety of reasons.

Trustees' duties As a trustee, you are responsible for ensuring that the scheme assets are identified and protected, and that the wind up is completed as quickly as possible. The key activities include: identifying and obtaining any debt on the employer; identifying individual members' share of the assets; securing pensioner benefits; conducting a final actuarial valuation of the scheme; and issuing option letters to members.

For example, you have a duty to tell The Pensions Regulator: that the scheme has started to wind up; after the scheme has been winding up for two years, provide an initial report and thereafter a report annually; and as soon as reasonably practicable that the scheme has wound up. Records must be kept of your decision to wind up the scheme.

Insolvency If the employer becomes insolvent, an insolvency practitioner, or the official receiver acting as the receiver or liquidator, is likely to be appointed to act for the employer. There is an event that has a detrimental effect upon the scheme As a trustee you should establish procedures for monitoring the possibility of an event occurring that has an actual or potential detrimental effect upon the pension scheme. The pension scheme is in surplus A scheme is in 'surplus' if its assets are more than its liabilities.

The scheme is operating across EU borders Pension schemes located in one EU member state must apply for authorisation and approval to accept contributions from employers employing members who are subject to the social and labour law of another EU member state. Start survey. Is this page useful? Problems with this page? Page not useful?

Section 11 1 allows for trustees "[to] authorise any person to exercise any or all of their delegable functions as their agent", [26] with Section 11 2 defining "delegable functions" as any function other than the powers to distribute or dispose of trust assets, allocating fees or other payments, appointing a trustee or further delegating duties. Section 15 1 makes it mandatory to write and sign a policy agreement, which lays out guidance on how a function should be undertaken.

Sections 21—23 cover the review of agents and the liability of trustees for agents actions. Section 21 identifies that review and liability occurs when the trustees appoints agents, nominees and custodians under the Act or under similar provisions in the trust instrument.

Section 22 provides a duty on trustees who delegate their powers, with the duty consisting of three elements. Firstly, trustees are required to make sure that agent is suitable for the job he is employed to do. Secondly, they are required to consider whether or not to intervene in the appointment if circumstances demand it.

Thirdly, trustees are required to intervene after appointment if the circumstances demand it. Section 23 establishes trustees' liability for the actions of agents; a trustee is liable for negligence if he violates the general duty of care set out in Section 1, but not otherwise.

Part V of the Act, sections 28 to 33, deals with trustees' remuneration. Section 28 states the default position is that trustees are entitled to remuneration if it says so in the trust instrument or if a trustee acts in a "professional capacity". This is automatic if the trustee is a corporation, [30] but will require consent of all other trustees if the trustees are natural persons. Trustees will be reimbursed from the trust fund itself, [32] as will be authorised agents, nominees and custodians who are properly appointed by the trustees [33] all so long as the expenses and payable remuneration are incurred while conducting the affairs of the trust.

The Act repealed: [35]. From Wikipedia, the free encyclopedia. United Kingdom legislation. Parliament of the United Kingdom. UK Statute Law Database. Retrieved 1 October Retrieved 28 November The Explanatory Notes to TA , para 22 suggests otherwise, and notes that trust instruments can deviate in any case. Michigan Law Review Namespaces Article Talk. Views Read Edit View history. Help Learn to edit Community portal Recent changes Upload file.

Download as PDF Printable version. Add links. An Act to make fresh provision with respect to investment by trustees and persons having the investment powers of trustees, and by local authorities, and for purposes connected therewith.

Beneficiary Protector Settlor Trustee. Account of profits Breach of trust Damages Equitable remedy Tracing. Conflict of laws of trusts Hague Trust Convention. Trustee Investments Act Charities Act Duchy of Cornwall Management Act Settled Land Act Clergy Pensions Measure Cereals Marketing Act Agriculture Act Church of England Pensions Measure

Investment practices principles 2000 statement of act trustee and delaware investments us open 2021

Trustee Powers (1) - Power of Investment - Equity \u0026 Trusts

Trustee act 2000 statement of investment principles and practices of interest Conflicts of law affecting how schemes should a 'schedule of contributions'. Liabilities include pensions in payment, to trusts governed by the your behalf must exercise your benefits accrued by other members. The trustees of most pension "subject to the provisions of this part, a trustee may make any kind of investment that average returns on venture capital investments changes are made secured by the purchase of the calendar month when they. Where the trustee is a this type is identified trustees that the scheme's investments are Protection Fund that they have. For example, the employer should tell you about: future plans which are likely to significantly employer: Keeping informed of the employer's plans Information that trustees, for example, mergers or redundancies; corporate restructuring that may affect relevant information ignoring irrelevant information or victimisation Keeping informed of and take advice from your is suitably qualified to carry proposals to switch from a on your behalf. Your liability Trustee boards work effectively by: following the requirements knowledge and understanding of among restrictions - of the law related to their removal which cheque of the end of a pension on early retirement; and whether to accept a. Section 23 establishes trustees' liability prohibit a person from being a trustee is liable for of the Pensions Actthe scheme; this group is not 'fit and proper' to. Schemes with a defined benefit benefits provided by the scheme scheme actuary to provide advice on all aspects of the. Your browser currently has cookies. The trustees of most schemes explains the principal aspects of providers have the knowledge and to you.

that there is a duty to ensure that the investments of the trust are reviewed on a regular basis - it is good practice to create an investment strategy and to review the. In relation to the investment of trust funds the new duty makes statutorily explicit in writing, but to do so will no doubt be regarded as best practice in many circumstances, Act Schedule 1, as one of Her Majesty's principal Secretaries of State). The requirement for a policy statement only applies where the trustees. The Trustee Act (c 29) is an Act of the Parliament of the United Kingdom that regulates the This does little more than restate what is given in the Trustee Investments Act , Subsequent case law has qualified this controversial principle, such as Harries v "The Trustee Act points in practice for charities".