The Deputy Pensions Ombudsman (DPO) has determined that two trustees who failed to ensure that member contributions were paid into a scheme could not rely on the protection of section 61 of the Trustee Act 1925.
Over a period of five months , the trustees of the SureStock Pension Scheme failed to ensure that member contributions, which were being deducted from pay by the employer, were being paid into the scheme.
The employer was subsequently dissolved and the outstanding contributions never recovered.
The trustees were found to have failed to “ensure the Scheme was being properly managed and that its assets were protected”. The scheme provisions included an employer indemnity but this was worthless following the employer’s dissolution, and there was no exoneration clause.
The trustees sought the protection of section 61 of the Trustee Act 1925 which excuses trustees from personal liability for breach of trust if they have “acted honestly and reasonably, and ought fairly to be excused”. The DPO found that the respondents had not acted reasonably, and she directed them jointly and severally to pay to the scheme a sum equal to the unpaid contributions plus interest, as well as £250 each to the member who brought the complaint.
This determination emphasises the need for effective internal controls to ensure that contributions are paid to the scheme when due and for trustees to consider what protections they have in place against personal liability.