A pension scheme trustee must act in the way that a prudent person would in their own affairs using their skills and expertise.. This duty is particularly relevant to selecting and dealing with the scheme’s investments.
A trustee’s powers and the procedures that they must adhere to are set out in documents known as the Trust Deed and the Scheme Rules. Trustees are bound by law to act in line with the terms they specify.
The trust deed sets up and governs the legal parameters of the scheme. The scheme rules set out more detailed conditions, for instance, what benefits will be provided.
Trustees have a legal responsibility to be thoroughly familiar with the documents that govern the Trust and to ensure that they understand all the terms and conditions properly both in general and in respect of any decision that they take to exercise powers in their role as trustee.
Trustees must consider the interests of all the classes of beneficiary covered by the trust deed and rules and act responsibly, impartially and without conflict of interest towards all of them. This does not always mean that every class of beneficiary is treated the same but all members of each class must be dealt with equally. The trustees must use their skills and expertise to find a fair and judicious balance and, in making decisions, give appropriate weight to the rights and interests of all concerned.