What is pension trustee liability insurance?
Pensions trustees liability insurance is a simple and cost effective means of transferring the risk for trustees, offering peace of mind to sponsoring employers, corporate trustees, pension schemes and individuals.
A policy could provide advanced funds to cover defence costs in addition to providing cover for settlement of an action.
Why is PLT necessary?
Liability which pension fund trustees face today is following the same trend as almost all other forms of managerial liability. Both in terms of potential exposures and offences, pension fund trustees face the increasing nature of our society to seek recompense for failures or inadequacies.
This overwhelming burden for individuals to ‘get things right’ has been exacerbated by government intervention, such as the Myners Report, which sets out guidelines and recommendations for pension fund trustees in areas such as decision making and performance management.
Pension fund trustees face a mass of potential offences or allegations which they would have to defend either themselves or via the company they work for without some form of insurance protection.
As well as the Pensions Act 2004, trustees are also subject to responsibilities detailed in the Financial Services Act 1986, Income and Corporation Act 1988, Data Protection Act 1998 and the Contract (Rights of Third Parties) Act 1999.
This plethora of statute has ensured that trustees now have a mass of potential exposures, including (but not limited) to the following:
- Administrative error
- Improper advice
- Violation of scheme documents
- Denial or changes to benefits due
- Misleading disclosures or advice
- Default on obligations to contribute to the scheme
- Conflicts of interest
