Trustee information

The normal minimum pension age is increasing from age 55 to age 57 on 6 April 2028. Individuals will retain the right to take benefits before age 57 if they have a protected pension age in their pension scheme. An individual will have a protected pension age in their pension scheme if before 4 November 2021 they had the right to take benefits before they reached age 57, that right was unqualified (they don’t need anyone’s consent to take their benefits) and on 11 February 2021 the scheme rules included provision to pay benefits before age 57.

Trustees should be:

• Checking their governing scheme documentation to understand whether it gives members an unqualified right to retire before age 57
• Checking their scheme Deed and Rules to see if they need updating to take the change into account
• Deciding how and when to communicate the increase in normal minimum pension age to their scheme members
• Considering the impact on default lifestyle strategies and making any necessary adjustments in good time
• Deciding whether their scheme will accept transfers in from schemes which have a protected pension age of 55 and then considering the implications of allowing those transfers in
• Ensuring that when processing a transfer out the receiving scheme is notified about the protected pension age if there is one

More information can be found by visiting: HMRC Pensions Tax Manual.

New responsibilities have been introduced to meet the requirements of climate change regulations. The Occupational Pension Schemes (Climate Change Governance and Reporting) Regulations 2021 require trustees to report in line with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations. The aim is to improve both the quality of governance and the level of action by trustees in identifying, assessing and managing climate risk.

Governance and reporting of climate change risk: guidance for trustees of occupational schemes

Most occupational pension schemes in the UK are required by law to be set up as trusts. It’s a way to make sure that the assets in the pension scheme are kept separate from the employer’s assets, and to protect the interests of scheme members. The trustee is the person or company who acts separately from the employer to make sure the pension scheme is properly run, and that benefits go to scheme members.

Your role and responsibilities

Most of your duties as a trustee are defined by trust law. Known as fiduciary duties, they tell you how you’re expected to act and the powers you have to act when you need to.

These are the main duties and powers available to you:

• Acting in line with the trust deed and rules
• Acting in the best interests of the scheme beneficiaries
• Acting impartially
• Acting prudently, responsibly and honestly
• Trustee Powers

There’s more information about your powers, role and responsibilities on the Pensions Regulator website.

What are the legal responsibilities?

It’s important that you understand the law relating to pensions and trusts, as well as the principles of the funding and investment of pension schemes. You’ll need to be familiar with all the scheme documents, including the trust deed and rules, the statement of investment principles, and the statement of funding principles.

To help make sure your knowledge is completely up to date and you’re fully able to take on the role, the Pensions Regulator provides a free online learning programme called the Trustee Toolkit.

The law for occupational pension schemes is supported by a Code of Practice issued by the Pensions Regulator. The code provides guidance on how to comply with the Pensions Act 2004 and the standards the Pensions Regulator expects.

Trustees need to be able to show they’ve complied with pension legislation and good practice scheme governance arrangements. The Code of Practice, along with defined contribution (DC) regulatory guidance, gives detailed information that will help you make DC quality features and practices a central part of your schemes. It’s designed to make sure schemes are run well and offer value, and to tell apart what the legal duties are and what are recommendations.

Trustees should fully understand and comply with the Code of Practice, a copy of which can be found here: General Code of Practice

There’s more information in these guides:

• The trustee board
• Scheme management skills
• Administration
• Investment governance
• Value for members
• Communicating and reporting
• Reporting duties

It’s up to trustees to make sure the pension scheme runs smoothly. That means taking responsibility for administration and the procedures you use to monitor and manage the scheme. 

You should have procedures in place for:

• Taking decisions about the scheme
• Keeping records and holding original documents
• Updating the trust deed and rules
• Obtaining an auditor's statement and audited accounts
• Providing information to members and others
• Producing the annual report
• Resolving disputes with scheme members

The Pensions Regulator has created a guide to administration and governance that will help you get the right processes in place and keep them there.

The annual statement by the chairperson of trustees, which must be produced within seven months of the end of each scheme year, should include:

• A statement on how the trustee is measuring against the investment principles
• A report on reviews that the scheme has conducted on its investment strategy and performance, and changes resulting from a review. If there was no review, then the scheme should provide a date of when the last review took place. For example trustees are required to design default investment arrangements in the members' interests (including any lifestyle strategy that may be in place) and keep them under regular review at least every three years
• An explanation of how the trustee is confident that core scheme financial transactions are processed promptly and accurately
• The types and level of charges and transaction costs in the default investment arrangement(s) during the scheme year, and the range of charges and costs in the other funds in which assets have been invested during the scheme year
• Any other information about transaction costs which the trustees have been unable to obtain, and an explanation of the steps being taken to obtain that information in the future
• An explanation of the trustees' assessment of the extent to which the charges and transaction costs represent good value for money for scheme members
• An assessment of how trustee knowledge and understanding requirements have been met, and an explanation of how together with the advice which is available to them, enables them to properly exercise their functions as trustees

The chairperson's statement must be signed on behalf of the trustees by the chairperson and be included in the scheme's annual report. As part of the annual report, it must be made available on request to members, prospective members and beneficiaries. The chairperson's statement will be scrutinised by the scheme auditor.

The chairperson of the trustees must be an individual who is a trustee of the scheme or a professional trustee body which is a trustee of the scheme. In the case where a company which is not a professional trustee body is a trustee of the scheme, the company must exercise its activities through an individual who is a director of the organisation.

The Pensions Regulator – The chair's statement

The government made a commitment to ensuring positive outcomes for occupational pension scheme members.

The Chairs statement should give an overview on:

• How trustees must assess the value for money they provide to their members in comparison with other available schemes
• The outcome of their ‘value for member’ assessment must be reported to the Pensions Regulator (TPR) in the scheme’s annual return
• The Government’s expectation is that if a scheme does not demonstrate good value for members then trustees should consider winding up the scheme or transferring members’ benefits into another scheme
• Schemes need to include the total value of the assets held for the provision of member benefits in their annual scheme return to TPR

Latest versions of the guidance drafted by the Government can be found at:

• Reporting costs, charges and other information: guidance for trustees and managers of occupational pension schemes
• Completing the annual Value for Members assessment and Reporting of Net Investment Returns

Pension scheme trustees must report certain breaches of the law to the Pensions Regulator, a duty often referred to as 'whistleblowing'. The requirement is covered in the Code of Practice. It says trustees, employers, professional advisers and others have a duty to tell The Pensions Regulator if:

• They reasonably believe a legal duty relating to the administration of the scheme has not or is not being met
• It is materially significant to The Pensions Regulator

Any reports must be made in writing as soon as possible.

• The Pensions Regulator helps protect the UK’s workplace pensions. Making sure employers, trustees, pension specialists and business advisers can fulfil their duties to scheme members, including raising the risk of pension scams.
• The Pension Wise service is now part of MoneyHelper. The easy way to get free help for all your pension and money choices.
• MoneyHelper is here to make your money and pension choices clearer. Here to put you in control with impartial help that’s on your side, backed by government and free to use.