In Ms Jacqueline Power v (1) The Trustees of the Open Text (UK) Limited Group Life Assurance Scheme (2) Open Text (UK) Limited  EWHC 3064 (Ch), the High Court considered whether either the trustee of an employee life assurance scheme or the employer that issued the scheme was under a duty to consider the level of cover provided under the scheme and whether the trustee was under a duty to consider whether the cover was appropriate.
The claimant, a widow, had brought proceedings against the trustee and the employer to recover a shortfall in the amount she had received after the death in service of her husband.
By virtue of certain provisions of the Income & Corporate Taxes Act 1988 (now repealed), a cap of £451,000 was placed on lump sums payable on death in service under the scheme. The trustee did not take advantage of subsequent changes in the law, which would have enabled a sum of £750,000 to be payable on death in service.
The Court was satisfied that, under the terms of the trust, it was the employer, not the trustee, who determined the level of cover provided by the scheme. Consequently, the employer owed an implied duty of good faith to members in determining the cover, but it did not owe any higher duty and owed no duty at all to potential beneficiaries. The Court found that the employer had not acted unreasonably or in breach of any duty in determining the level of cover. As there was no duty on the trustee to consider the level of cover, it followed that there was no duty to consider whether the cover was appropriate.
The court highlighted that trustees had a duty to inform themselves before making a decision but this did not include a duty to inform themselves about matters outside their concern, such as in this case, the level of cover.