December 2009 saw a new Pensions Regulator’s Code of Practice coming into force on the subject of “Trustee Knowledge and Understanding”. It replaces the old code that was published in 2006.
By way of background, trustees of occupational pension schemes are required by the Pensions Act 2004 to be “conversant” with their scheme documentation. They are also required to have “knowledge and understanding of the law relating to pensions and trusts” and “the principles relating to the funding…and investment of the assets”.
Trustees should be aware that there are two notable differences between the old and the new codes. The fi rst is that trustees are now required to have read through their scheme’s trust documentation thoroughly.
The second notable difference is that, unless trustees can fi nd an alternative of their own, the Pensions Regulator expects trustees to complete its “Trustee Toolkit” (the free on-line learning programme) as part of their trustee training programme. The aim of the Trustee Toolkit is to help trustees identify and remedy any gaps in their knowledge and understanding.
Log on to the Trustee Toolkit
All trustees who have not already done so, should log on to the Trustee Toolkit using the following link: www.trusteetoolkit.com. The Toolkit is designed around a series of modules followed by questions, so you can save what you have done and go back to it at a later date. You should expect the whole course to take about 30 hours in total to complete. On completion you can download a certifi cate to record that you have fi nished the course successfully. You should then note this in your scheme’s central training log. This is usually held by the pensions manager or secretary to the trustees.
Obtain a copy of your scheme rules and read them from cover to cover!
If you are a trustee of an occupational scheme you should ensure that they have a copy of the most up-to-date trust deed and rules for your scheme. You then need to read them through. We have set out some tips below on how to go about this.
Start by looking at the pension and death benefi ts payable under your scheme. Then consider who has the power to make decisions in relation to material provisions such as setting the employer contribution rate, providing special benefi ts, investing assets, bulk transferring assets into and out of the scheme, terminating and winding up the scheme. Finally, you should look at the clauses that are relevant to you as a trustee such as expenses and, perhaps the most important, (!) trustee liability.