New regulations come into force on 6 April 2015 requiring trustees of relevant multi-employer schemes to be independent of any undertaking which provides advisory, administration, investment or other services in respect of the relevant multi-employer scheme.
To satisfy the requirements a majority of trustees, and in any event, the Chair must be independent.
In order to be “independent” a trustee must satisfy the following tests. 1 and 2 below are factual and therefore should be straightforward to determine. 3 and 4 below are more subjective and may need some analysis.
- He must not be a director, manager, partner in business with, or employee, of a service provider to the scheme (or an undertaking connected with a service provider). This applies at the current time and over the last 5 years. A connected undertaking would for example be another entity in the same corporate group.
- He must not be receiving payment or other benefit from a service provider (except payments/benefits in his role as trustee of the scheme).
- He must have been appointed via an open and transparent process. The regulations give some guidance as to appropriate processes.
- If he has a relationship with a service provider, consideration must be given to whether his obligations to the service provider conflict with his obligations as a trustee of the scheme, and whether his obligations as a trustee will take priority in the case of a conflict.
What does this mean?
Relevant multi-employer pension schemes, such as master trusts, should review the current trusteeships and ensure that they meet the necessary requirements relating to independence. Such schemes have until 5 July 2015 to comply.