Company Pension Schemes

4. Protecting Members' Interests

Trustees and advisers must be appointed to protect occupational scheme members' interests.

4.1 Trustees must ensure that the pension fund is run for the benefit of its members, in accordance with the scheme's rules.

• Members must be offered the opportunity to elect at least one third of the trustees. The remaining trustees usually come from management.
• Trustees appoint the investment manager (or managers), actuary and auditor.
• Trustees risk severe personal penalties if they are remiss in carrying out their duties.

4.2 The fund manager invests the scheme's funds in line with the trustees' Statement of Investment Principles.

• Schemes usually appoint one or more investment management firms. If investment performance is poor, they may decide to switch to another firm.
• Charges are normally taken from the fund.

4.3 In final salary schemes, trustees must appoint an actuary, who calculates whether the value of the fund is sufficient to finance the company's future pension obligations. If not, the employer must make up the difference.

• Actuaries also set the calculation guidelines for transfer values when employees leave and want to take their pensions with them.

4.4 The trustees must appoint an auditor.

• Audits must be carried out within seven months of the scheme year end.
• The auditor will check that the fund holds the investments shown in its books.He or she will also verify that correct contributions have been paid.
• Trustees and managers are also required to notify any shortfall in payments to the Pensions Regulator if it is likely to be material.

4.5 As an employer, you are legally obliged to consult members of occupational or personal pension schemes you offer if any significant changes to the scheme(s) are planned.

• For example, an increase in the pension age.
• Or a change in the rules, to prevent new admissions.