NAPF survey highlights concerns over pension fund trustee liability exposure
Individuals could be detered from becoming pension fund trustees due to growing concerns about the personal liabilities faced by trustees as a direct result of the need for greater knowledge and understanding of scheme law, funding and investment strategies, ACE European Group (ACE) has warned.
In a survey conducted at the recent National Association of Pension Funds (NAPF) conference, 30% of those questioned said they would now not take up a trustee role because of the potential liability exposure created by the Pensions Act 2004 Trustee Knowledge and Understanding requirements.
More than 40% of respondents indicated that if they were considering trusteeship now, they would only do so if there was trustee liability insurance cover already in place.
Emma Watkins, pension trustee liability insurance specialist at ACE, said: “The survey, one year on from the publication of the ‘Trustee Knowledge and Understanding Code of Practice’, clearly shows that personal liability has become a growing concern amongst pension trustees. As a result, the availability of trustee liability insurance has become an important issue for individual trustees.”
Close to 60% of survey respondents felt the requirements would make it harder to recruit member-nominated trustees.
ACE insisted this will be of concern to employers given that at the end of October 2007 the ability to opt-out of member-nominated provisions, designed to ensure that at least one-third of trustees are nominated and selected by members, will come to an end.
Watkins added: “Although the onus and cost of providing relevant insurance cover is bound to fall on the sponsoring employers, the provision of cover should be seen as a useful recruitment tool in attracting new trustees.”
