UK - Revised guidance has been put out for consultation to help trustees understand their responsibilities when applying to enter the Pension Protection Fund (PPF).
The updated 'Trustee Good Practice Guide' explains how the assessment period for the organisation works and outlines what the PPF expects from trustees, as they are responsible for the day-to-day control of the pension scheme until the assessment phase is complete.
In the consultation, the PPF sets out five key principles which it expects trustees to adhere to:
The guidance states the PPF will hold trustees "ultimately responsible" for their advisers' actions, and warned if trustees do not have the confidence to challenge their advisers on decisions, they should consider appointing an independent trustee.
In addition, the document warns one of the "most important decisions" for trustees is how the scheme assets are invested, and during the assessment period trustees should not delay in seeking investment advice and, where necessary, should "re-organise the assets so they more closely match the liabilities of the scheme".
However, the PPF consultation warned although it "outlined the key skills" it believes are necessary to see the scheme through assessment, "these are not exhaustive and we encourage you to expand your skills and knowledge as much as you can".
That said, the document added lay trustees, in particular, should consider the additional obligations of the assessment periods, as the PPF expects trustees to have the "necessary skills" for taking a scheme through an assessment process and ensure they "know something about the legal environment in which we have to work".
The PPF claimed the revised guidance, which will be complemented by a new training module being developed by The Pension Regulator (TPR) as part of its Trustee Toolkit, will also help the organisation meet its target of completing the assessment phase of a scheme within two years.
Walker said: "We very much want to support trustees and their advisers through what is a complex and demanding time. However, we want to make it very clear what we expect from them at all times during the process."
"We believe this guidance can help us achieve our target for seeing schemes through assessment within two years - and bring certainty to scheme members by enabling trustees to complete the assessment period in a timely way," he added.
The PPF assessment period is similar to a pension scheme 'wind-up' and determines whether a scheme is eligible for entry to the compensation fund, the assessment period begins as soon as the eligible scheme's sponsoring employer becomes insolvent, but trustees remain in control until the process is completed.
At this point, the PPF takes over responsibility for the payments, but only if it has determined the scheme cannot afford to pay out more than the PPF levels of compensation, which is currently up to 90% of the benefit entitlement for active or deferred members.
The consultation will close to responses on July 25 2008, although over the next 12 weeks the PPF confirmed it would be hosting a series of trustee roadshows across the country to help explain the new guidance.
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