Oran Hall, Guest Writer

Trustees are ultimately responsible for protecting the interests of the members of approved superannuation funds and retirement schemes.

They are accountable to the members and to the Financial Services Commission (FSC) which, among other things, is charged with enforcing the Pensions (Superannuation Funds and Retirement Schemes) Act, 2004.

The trustees effectively serve as the board of the approved fund or scheme and are legally responsible for all aspects of its operations.

They are constrained by the rules of the trust deed and should therefore be conversantwith them.

The board of trustees, on which the fund members and pensioners must be adequately represented, is required to meet at least once per year.

Professional advice

Trustees should seek professional advice when necessary and often appoint a company or a group of persons to manage the fund or scheme but are fully responsible for its operations nonetheless.

They determine the nature of the management arrangement to be established, give policy direction to the managers and get regular management and performance reports from them.

It is the trustees' responsibility to ensure that audits and actuarial valuations are done on time and that statutory reports are filed when due.

They are within their rights to terminate the services of a manager or administrator who fails to meet their expectations.

Meet constituency requirement

Trustees must organise themselves to satisfactorily meet the expectations of their constituencies. They should set up sub-committees to deal with various aspects of the operations of the approved pension scheme; require timely pre-circulation of documents and papers needed for decision-making; keep themselves informed about the happenings of meetings they are unable to attend; arrange for regular operations reports and meet regularly with management

Serious members of approved pension arrangements expect their trustees to account to them regularly.

They expect to be consulted on decisions that have a serious financial impact on them and to receive regular easy-to-understand communication from the trustees on fund performance and developments.

Members also expect trustees to ensure that their pension contributions are deducted and paid on time to the investment manager.

The Pensions Act calls for trustees of superannuation funds and retirement schemes to make available to members their benefit statement within four months of the end of each plan year.

A schedule of investments is to be made available for inspection and members have recourse to the FSC if their interests are being jeopardised or not being served.

Trustees are obliged to meet stringent tests to be registered.

The 'fit and proper' rule requires that they have impeccable employment records, be individuals of probity in business, be of sound judgement and experienced in and knowledgeable about pension issues and the management of trusts.

They must ensure that they are appointed in accordance with the terms of the trust deed and understand the statutes and policies bearing on their functions.

Auditors and actuaries, in their statutory roles, are required to report their findings to the FSC, which has authority to cancel the registration of trustees who fail to dispense their functions satisfactorily.

Although trustees are given indemnity if their actions are taken in good faith and upon professional advice, they are required to safeguard the financial health of the approved pension arrangements under their watch.

Consequently, they are required to submit the following information to the FSC: annual audited accounts (including details of assets) within nine months of the financial year, actuarial valuations and reports on solvency once every three years and proof of custody of assets.

The trustees of some pension schemes, in the past, anaesthetised themselves while the condition of the schemes they were meant to keep healthy deteriorated to the point of near-death.

Today's reality is that trustees must be wide awake if the growing pension fund sector is to maintain a state of good health.

alforan@cwjamaica.com