Only trustees of large pension schemes tend to have dedicated resources at their disposal – perhaps they even have a pensions manager and their own staff at their disposal.
For most pension scheme trustees however the norm is outsourced secretarial, administration, fund accounting, investment and payroll services.
Often the glue that holds this all together is provided by the overstretched company secretary, financial controller or HR manager who doubles as the employer’s only in-house pensions resource. The often substantial support provided to trustees by the employer is often ill-defined, unrecognized and at times rather ad-hoc.
Fine when all goes well but when if it doesn’t trustees may well have a significant cause for regret.
Even the discipline of writing down a list of the employer’s responsibilities and the trustees’ expectations is useful.
- Does the employer hold or control important trustee documents such as trust deeds and minutes?
- Where are key documents held and who has access to them?
- What about retention policies – 6 years or less may suffice for VAT but in pension scheme terms this is a blink of the eye? Dalriada has inherited more than one trustee appointment where the trustees have been forever parted from crucial historical record by over zealous shredding!
- Are there crucial trustee records held on employer computer systems? Most enterprises have Business Continuity Plans in place but can trustees be sure that they are actually robust and thoroughly tested. As far as the pension scheme is concerned any loss of records would be on their watch.
- What about the risk of cyber-crime – trustee records that might be rich in personal data and details of asset holdings could be rich pickings for those with ill intent. How secure is the employer’s network? – if these records belong to the trustees it is their responsibility to make sure.
Operational risk management is a key and often neglected part of a trustee’s role. Our experience is that a professional trustee can often help lay-trustees ask the crucial questions that need to be asked of employers who provide support services. The key step is documenting the relationship between the trustees and the employer and describing the terms on which services are supplied.