Ombudsman Sounds Warning for Pension Scheme Trustees


A recent decision of the Pensions Ombudsman sounds a warning for pension scheme trustees who breach the terms of the pension trust deed by their investment policy. It is a particular warning for trustees who may be tempted to lend scheme assets.

In the decision, three of the trustees of the Ashridge Limited Discretionary Pension Scheme were ordered to pay a total of £411,000 plus interest after being found to have knowingly committed a breach of the terms of the trust deed. The trustees had lent more than half of the pension scheme assets to its failing sponsor and had also made what was described as a ‘questionable’ investment in the USA – a Florida property from which no rental income arose.
The winding-up of the scheme commenced in 1996, following which a scheme member made a complaint to the Ombudsman.
This decision follows a similar one made last summer in which the trustees of the Greenup and Thompson pension scheme were ordered to pay £130,000.
In both cases, the trustees sought to rely on a clause in the trust deed that exonerated the trustees from personal liability for their actions, but failed because the breaches had been ‘knowingly committed’.
Says <<CONTACT DETAILS>>, “Trustees of company pension schemes who fail to take their investment duties seriously can face a nasty surprise. If you have concerns about the direction a pension scheme of which you are the trustee is taking or has taken, we can advise you.”
Partner Note
Reported in Professional Pensions, 30 October 2008.

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