As trustees dealing with challenging issues and managing a large number of different groups of members it can be difficult to keep on top of everything that is going on in the scheme, particularly when you rely on others to do things for you.
How certain are you that your pension scheme’s governing documents reflect the intentions of all parties? That correct administrative records are being kept? That clear processes are being followed? That members’ benefits are being paid correctly?
Mistakes ending in litigation can arise due to a number of reasons: confusing rules, gaps in administrative records, opaque processes, mergers of schemes that are not properly dealt with, a change in administrators where records have been poorly kept or are not passed on and even due to the inaction of trustees and advisors.
In trying to avoid costly and time consuming disputes there are 4 top tips trustees can follow:
- Make sure that you thoroughly document the decision to amend your scheme’s governing documents. Depending on which parties hold the power of amendment, this may need to be documented in both trustee and company board minutes. Give clear, written instructions to the adviser who is making the amendments and keep copies of these instructions and any other relevant correspondence. Trustees should then review any amended document carefully before it is executed; you should not presume that your instructions have been followed.
- Instruct legal advisors to carry out regular, comprehensive reviews of your scheme’s documentation to ensure that it is up to date and comprehensive.
- With the assistance of the scheme advisors identify any areas of ambiguity in the scheme rules and consider whether it is appropriate to address these.
- Finally, carry out regular audits of benefit payments to identify missed or incorrect payments and ensure these are rectified, with the assistance of your legal advisers in cases which are not straightforward.
Following these steps may help you avoid time consuming, lengthy disputes and could save the scheme significant sums of money.
This blog post was written by Associate Thea Maertens.