Term
List the different types of trustee. (8) |
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Definition
Individual trustee Corporate Trustee Trust Corporation Employer as Trustee Custodian Trustee and Committee of Management Pensioneer Trustee Independent Trustee Member Nominated Trustee/Director
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Term
With respect to Individual Trustees, any person over the age of 18 can be appointed as a trustee of a pension scheme, except where that person: (6) |
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Definition
Convicted of an offence involving dishonesty or deception Undischarged bankrupt Has made an arrangement with his creditors and the arrangement is still in force Disqualified from acting as a company director Suspended or disqualified from acting as a trustee by a court order or the Regulator Incapable of acting as a trustee due to a mental disorder.
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Term
What is a corporate trustee? |
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Definition
A company which is formed to act as a trustee, with all the necessary powers in its Memorandum and Articles of Association. |
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Term
How should the directors of a corporate trustee act? |
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Definition
In a trustee-like manner in their management of the pension scheme as if they were individual trustees. However, the directors' fiduciary duty is owed to the company rather than directly to the scheme members. |
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Term
When would a company be disqualified from acting as a trustee? |
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Definition
Where one of its directors would be disqualified from acting as an individual trustee by one of the following reasons: Conviction involving dishonesty or deception Undischarged bankrupt Has an arrangement with creditors Disqualified from acting as company director
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Term
What is a trust corporation? |
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Definition
It is a corporate trustee which is: formed under the laws of the UK and has a place of business in the UK empowered by its constitution to act as a trustee either incorporated by a special Act of Parliament or is a registered company with an issued share capital of at least £250,000 of which £100,000 is paid up.
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Term
What is the main advantage of a trust corporation over a corporate trustee? |
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Definition
A trust corporation can give a valid receipt for the proceeds of a sale of land, otherwise at least 2 trustees are required. |
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Term
What is an employer as trustee? Why is this becoming more uncommon? (2) |
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Definition
Where the employer acts as the sole trustee. |
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Term
What is a custodian truste? |
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Definition
Where the trust deed requires separation of the trustees dual function, the 'custodian trustee' is appointed to simply hold the scheme assets. |
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Term
What is a 'committee of management' used for? |
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Definition
Where the trust deed requires the separation of the trustees dual responsibilities, a 'committee of management' will be responsible for the administration of the scheme. |
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Term
What is a 'Pensioneer Trustee'? What is the main purpose of a pensioneer trustee? |
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Definition
HMRC required SSAS's to have a professional trustee appointed from a list of approved 'pensioneer trustees'. |
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Term
Notes on Independent trustee |
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Definition
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Term
MNT, process and guidance |
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Definition
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Term
Under what circumstances can Section 36 of the Trustee Act 1925 be used to appoint new trustees? (5) |
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Definition
In order to replace a trustee who: |
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Term
Appointment of Trustees by the Regulator |
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Definition
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Term
Who can remove trustees and in what circumstances? (6) |
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Definition
Trust deed sets out circumstances and method Principal employer MNT's - principal employer with consent of all trustees Pension Regulator - can prohibit a person from being a trustee where he deems them not to be a fit and proper person. Court - where the proper execution of the trust is being threatened. Section 36 of the Trustee Act 1925
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Term
Under what Section of which Act can a trustee be disqualified? Under what circumstances will a person be automatically disqualifed? (4) |
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Definition
Section 29 of the Pensions Act 1995 Convicted of an offence involving dishonesty or deception Undischarged bankrupt Has made an arrangement with creditors Disqualified from acting as a company director.
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Term
The Regulator has the power to suspend a trustee: (5) |
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Definition
pending consideration being given to the making of a prohibition order where the trustee is a company, if a petition for the winding up of the company has been presented to the court where a bankruptcy petition has been presented to the court where proceedings have been instituted for an offence involving dishonesty or deception where an application has been made to the court for a disqualification order against him acting as a company director.
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Term
What are the duties of a trustee as required by law and by statute? (9) |
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Definition
Duty on Acceptance of Trusteeship Duty to act in accordance with the trust deed Duty to act impartially Duty to exercise reasonable skill and care Duty to act without charge Duty not to delegate Duty to act jointly Duty not to profit from trust property Duty to prepare and disclose accounts
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Term
In relation to 'Duty on Acceptance of Trusteeship', what should a person do to comply with this duty? (6) |
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Definition
familiarise himself with the trust property, terms of trust and documentation ensure that the trust property is vested in him and his co-trustees consider the suitability of the investments ensure that accounts are maintained ensure duties are not delegated to others unless permitted in trust deed or by statute enusre trustees do not profit from trust unless deed or statute allows or beneficiaries consent
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Term
Which duty was considered in Edge v. Pensions Ombudsman (1999) What did the case concern and what was the outcome? |
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Definition
Duty to act impartially. Concerned a decision by trustees to use surplus in scheme to reduce employee and employer contributions and grant additonal benefits to members who were in service on 1 April 1994. Pensioner member complained as his contributions had helped to create surplus but he received no additonal benefit. Rejected by Court of Appeal. Trustees cannot confer an advantage on one beneficiary at the expense of the other, but trustees do not have to treat all beneficiaries in the same way.
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Term
Duty to Exercise Reasonable Skill and Care What level of skill and care is expected of trustees? |
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Definition
Skill and care that the ordinary man would use in the management of the affairs of a third party for whom they felt morally bound to provide. Professional trustees: A higher standard is expected. |
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Term
Duty to Act Jointly Under what circumstances do Trustees not need to act jointly? (3) |
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Definition
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Term
What additional statutory duties do trustees have? (12) |
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Definition
Duty of care Payment of tax Disclosure Notification of certain scheme-related events to the Regulator Duty to maintain a statement of investment principles Duty to prepare a payment schedule/schedule of contributions Duty to put in place a recovery plan Duty to ensure one third MNT's Duty to put in place and operate a IDRP Duty to operate a separate bank account Duty to pay cash equivalent transfer values Duty to have sufficient knowledge and understanding.
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Term
Duty of Care Which act imposed the statutory duty of care? The statutory duty of care applies when a trustee exercises powers in respect of? (6) |
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Definition
Trustee Act 2000 Investment Acquisition of land Entering into arrangements under which a person is authorised to act as agent, nominee or custodian Compounding of liabilities Insuring trust property Valuing or auditing a reversionary interest in any of the trust property.
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Term
Since when have trustees been required to comply with TKU?
Trustees must have appropriate knowledge and understanding of: (3) |
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Definition
- Since 6 April 2006
- T's must have appropriate knowledge and understanding of:
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Conversant with scheme's documentation
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TDR
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SIP
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SFP
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any other docs
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Reg Code of Practice
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Understand fully any advice given
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challenge advice if sensible to do so
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enter fully into all decision making processes
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New T's - 6 month grace period
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Regular training and keep log
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Term
General Powers of Trustees
Most important powers (12)
Balance of powers |
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Definition
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Amend the trust deed and rules
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Appoint and remove trustees
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Invest the scheme assets
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Set employer and employee contribution rates
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Augment members' benefits
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Act by majority
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Insure benefits
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Buy annuities
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Deduct tax from payments
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Make and accept transfer payments
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Admit new employers to participate in the scheme
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Wind up the scheme
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The allocation of powers between the principal employer and the trustees.
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Determined not only by scheme documentation but also statutory provisions. E.g. Pensions Act 2004 requires trustees and employers to agree upon the rate of employer contributions even where the trust deed provides otherwise.
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Term
What is a scheme's 'Balance of Powers'?
What determines a scheme's 'Balance of Power'? |
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Definition
The allocation of powers between the principal employer and the trustees.
Determined not only by scheme documentation but also statutory provisions. E.g. Pensions Act 2004 requires trustees and employers to agree upon the rate of employer contributions even where the trust deed provides otherwise. |
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Term
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Definition
- Powers:
- Trust deed contains wide investment powers which permit T's to invest scheme assets
- In absence of express power, PA95 gives trustees general power of investment
- Duty:
- Ordinary prudent man would ...
- Not only to invest but to actively seek the best possible financial return compatible with:
- degree of risk the prudent man would regard appropriate to the trust
- best financial interests of all beneficiaries having regard to the main purpose of the trust, regardless of personal views ...
- OPS(Inv) Regs 05 - T's must exercise their discretion in accordance with the following principles (if 100 or more members):
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Assets must be invested in the best interests of members
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Power of investment must be exercised in a manner calculated to ensure the security, quality, liquidity and profitability of the portfolio.
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Assets must be invested in a manner appropriate to the nature and duration of the expected future retirement benefits payable.
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Assets must consist predominantly of investments admitted to training on regulated markets (all others kept to a prudent level)
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Assets must be properly diversified
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Investments in derivative instruments may only be made if they reduce risk or facilitate efficient portfolio management.
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Term
Statement of Investment Principles |
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Definition
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Term
Who can trustees delegate day-to-day investment decisions to? (2) What can trustees not delegate? |
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Definition
The strategic investment functions, i.e. Preparing and revising the Statement of Investment Principles |
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Term
Trustees who delegate investment matters to a fund manager are not responsible for the acts or defaults of the manager so long as they satisfy themselves that: (2) In relation to an investment sub-committee, who has liability? |
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Definition
The fund manager has the appropriate level of knowledge and experience The manager is carrying out his work competently and complying with the requirements of Section 36 of the Pensions Act 1995 and The Occupational Pension Schemes (Investment) Regulations 2005.
Trustees remain liable for the acts and defaults of the sub-committee. |
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Term
Give examples of the circumstances in which trustees may be required to exercise their discretion? What happens if a beneficiary challenges a discretionary decision reached by trustees? |
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Definition
Courts and Pensions Ombudsman can't subsitute their own decision for that of the trustees. If they think trustees have not exercised their discretion properly, they should refer the decision back to the trustees for them to reconsider. |
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Term
When exercising discretion, trustees must: (5) |
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Definition
Ask themselves the correct questions Not act capriciously - decisions should not be perverse or irrational Consider all relevant factors Not consider any irrelevant factors Exercise the deiscretion themselves (unless valid delegation in place).
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Term
What matters are typically covered in the trust deed concerning the conduct of trustee meetings? (4) |
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Definition
How, to whom and by when notice of the meeting should be given The number of trustees required to constitute a quorum How decisions are made (majority) How the chairman should be appointed and whether he has a casting vote.
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Term
Trustees of eligible schemes are required to notify to the Regulator whenever the following events occur: (5) |
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Definition
Actuary and/or auditor changed 2 or more occassions within a 12 month period. Making a transfer payment, or accepting a transfer, the value of which is more than the lower of: 5% of assets and £1.5m A decison to grant benefits, or a right to benefits, to a member, the cost of which is more than the lower of: 5% of assets and £1.5m Any decison to take action which will result in any debt not being paid in full A decision to grant benefits, or a right to benefits, on more favourable terms than those provided by the scheme rules without seeking the advice of the actuary or securing additonal funding where such funding was advised.
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Term
In what 4 ways can trustees protect themselves from liability? |
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Definition
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