Role of Pension Fund Trust Plans

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Office of the Commissioner of Insurance

• Role of Pension Fund Trust Plans
• By Tracy Gibson

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INTRODUCTION

• A trustee is the person to whom
• the property of the trust is
• entrusted to be managed in
• accordance with the objects of the
• trust.

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DUTIES OF TRUSTEES

• Acquaint oneself with the terms of the Trust
• Deed
• Comply with the duties outlined in Trust Deed
• Act with care, diligence, and skill
• Act impartially and in good faith
• Ensure that all property of the Plan is vested in
  the names of himself
• Keep property free from liens
• Maintain a proper account of the pension funds.

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STANDARD OF CARE

• Trustees management of pension
• funds demand a greater than normal
• standard of care.

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STANDARD OF CARE

• Trustees can be sued by beneficiaries if they act
  negligently
• Trustees must avoid positions where private
  interests conflicts with their duty as trustee
• Trustees must not gain directly or indirectly
  from the administration of the trust apart from
  the remuneration to which he may be entitled.

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GOOD FAITH

• A trustee must
• exercise his powers in an independent and
  objective manner
• exercise his powers for the purpose for which it
  was given
• act within the limits of authority.

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FIDUCIARY DUTIES

• Trustees stand in a fiduciary
• relationship to the trust and the
• beneficiaries.

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FIDUCIARY DUTIES

• The No-conflict Rule
• Trustees must avoid material conflict between
  their interest and those of the Plan
• This includes personal economic benefit not
  allowed under the terms of the Trust Deed or in
  circumstances where the benefit is obtained in
  conflict with the interests of the trust

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FIDUCIARY DUTIES

• The No-conflict Rule (contd)
• This rule does not apply where an
• employee trustee exercises the power
• vested in him in a manner that may
• benefit him as a member of the Plan.

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FIDUCIARY DUTIES

• The No-conflict Rule (contd)
• Where a trustee acquires an interest or
• proposed interest with the trust, he must
• immediately declare the nature and extent
• of his interest.

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FIDUCIARY DUTIES

• Interest includes
• relationships by blood or marriage with a person
  who has such an interest
• any form of employment, temporary or otherwise
• direct or indirect financial interest or any
  control over any legal entity which has such an
  interest.

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SUMMARY OF DUTIES

• Duty to acquaint oneself with the terms of the
  Trust Deed
• Duty to use due diligence and reasonable care in
  managing the Pension Plan
• Duty to act impartially between the
  beneficiaries
• Duty to ensure that all property of the Plan is
  vested in all the Trustees names
• Duty to account and give information
• Duty to disclose conflicts of interest
• Duty not to profit from the Plan
• Duty to exercise your discretion.

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OTHER RESPONSIBILITIES

• Ensure that
• the employer pays over contributions on time
• the right benefits are paid out to beneficiaries
  on time
• proper financial records are kept for the fund
• the fund is properly invested in line with the
  funds investment principles and relevant law
• suitable managers are appointed
• Full and accurate accounting records are kept
• members of the Plan are provided with information
  about the scheme and personal benefits.

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WHO CAN BE A TRUSTEE?

• Individuals or corporate bodies (Trust
  Corporations)
• Note
• A minimum of two trustees is
• required to give valid receipt of Trust
• Property.

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WHO CAN BE A TRUSTEE?

• Initially
• Trustees may be appointed by powers conferred by
  the Trust Deed and
• Subsequently by
• Statute (Trustee Act 1925) and
• By the Court.

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WHO CAN BE A TRUSTEE?

• A subsequent trustee may be appointed
• on the death of a trustee
• where a trustee remains outside of the
  jurisdiction for more than 12 months
• on retirement
• where a trustee refuses to act
• where a trustee is unfit or incapable of acting
• where a trustee is removed in instances of fraud
  or misrepresentation.

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WHO CAN BE A TRUSTEE?

• Pay attention to the following
• personal history
• professional qualifications
• employment records
• experience in profession
• business affiliations
• character references
• moral standing in society.

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WHO CAN BE A TRUSTEE?

• The applicable standard is
• the care a prudent man of
• business would exercise in
• managing his own affairs.

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CONCLUSION

• Trustees must be aware of their legal
• duties and responsibilities and should
• keep themselves up to date with changes
• in legislation that affect pension issues.
• They should act in line with the Trust
• Deed, Plan rules, and legal framework
• surrounding pensions, and act prudently,
• conscientiously, honestly, and in the best
• interests of the scheme beneficiaries.

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