Trustee Duties

I am an owner / director of an SME. I am also, as an individual, one of the trustees of the employee pension scheme. I do not understand what this means and what duties I am supposed to perform in this regard. Can you please explain this to me?

The rules and regulations surrounding this issue are quite varied and complex, but I will give you a general overview of your situation.

A Trust is a legal arrangement, the operation of which is governed by Trust law, and in this instance the purpose of which is to manage assets (Pension Assets) on behalf of a beneficiary (for example an employee).

Being a trustee is a complex business.  You will have a wide variety of trustee duties and responsibilities, such as:

• Invest the scheme assets in a suitable and appropriate manner
• Consult appropriate experts and take advice in carrying out your duties as a trustee.
• Not to profit personally from your role as trustee.
• Act at all times in the best interests of the members in the pension scheme / beneficiaries of the Pension scheme.
• Ensure proper membership and financial records are kept.
• Act in accordance with the terms of your Plan’s Trust Document and Rules.
• To ensure employer / employee contributions to the Pension plan are paid within 21 days from the end of each month

The above is not by any means an exhaustive list but will give you a feeling for the onerous nature of being a pension trustee and the need to take due care and diligence when given the role of a Trustee.

Failure to follow the terms of the trust and act in the best interests of members can have serious consequences. Trustees are liable for breaches of their duties and as such can have personal liability attached to this role. Where a trustee has, in the opinion of the courts, breached their trustee obligations, the trustee may have personal exposure. For example if it were found that you breached your role as trustee, and where it was not by means of a simple error of judgement, which resulted in a loss of Plan assets (a loss in the value of the Pension fund), you could be personally liable to restore the value of the loss. In addition serious breaches of the Pensions Act can also result in fines or imprisonment.

In order to help with understand and comply with your duties as a Trustee of an Occupational Pension Plan, all Trustees must undergo appropriate training every 2 years. You should ensure that your Broker / Pension Provider offer this service to you or alternatively you can undergo on line training on www.pensionsboard.ie

There is also another solution to this issue. You could opt to outsource the trustee function to a specialist Revenue appointed Pensioner Trustee. For a yearly fee they will take over your trustee duties and responsibilities. This can be a prudent measure to take where you are the trustee of a large pension scheme and do not wish to take on the onerous tasks this involves.