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Pensions Update

Scheme Governance - Employer Relationship Questionnaire

One of the key relationships for the trustee board is with the sponsoring employer and although the trustee board may well be required to enter into negotiations with the employer on certain matters (such as funding), consultation or agreement to various aspects may be required between the two parties either under legislation or specific scheme documentation requirements.

Trustee board members need to consider the queries as individuals and as a trustee board as a whole – particularly as most trustee boards are jointly and severally responsible for the actions of the trustee board as a whole.

1. Do all parties recognise the separate roles and responsibilities? 

a. A balance of powers table can assist both parties in defining the specific scheme powers but consultation between the parties is always preferable. 

b. Does the employer appreciate the trustees’ fiduciary duties which may sometimes conflict with any employment role? Does the employer accept potential conflicts of interest may arise and how these will be handled in accordance with the trustees’ conflict of interest policy? 

c. If any of the trustees are employer directors, have the appropriate Companies Act authorisations been formalised to act as a trustee? 

d. Are all parties aware of the potential conflict of interest which advisers may face if appointed by both parties and recognise if these cannot be managed, different advisers may need to be appointed? 

e. Is there confidence that the employer (and if applicable parent company) is suitably advised and understands trustees’ and employer legal obligations in respect of the pension scheme? 

f. Is there confidence that the employer (and if applicable parent company) has a suitably understanding of the notifiable event, reporting and clearance requirements and procedures with the Pensions Regulator?

g. Are employers aware of the time commitments may be required by trustee board members and is there a procedure to update information if required for specific projects?  

2. Are the lines of communication between the parties appropriate? 

a. Is there a recognised point of contact at the employer for raising issues and instigating discussions? 

  • Are any related conflicts of interests recognised and managed?
  • Is the recognised point of contact appropriate for each specific project?
  • Does the employer make a suitable representative available to attend trustee meetings when requested? 

b. Are there any specific issues which require the input and/or authorisation of a parent company contact?

c. Does the employer have a clear internal decision making process for pension policies and are both the process and any policies (including member communications) shared with the trustee board? 

d. Are there any current specific employer pension policies and objectives of which the trustee board should be aware? 

e. Is there a protocol and system agreed for sharing information between the parties in particular for assessing employer covenant and notifiable events?

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  • Lucy Herbert
  • Legal Adviser - Associate
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