Q&A-What are my rights and responsibilities as a Trustee?

I was a union representative for 15 years at the company I work with, so I have a background of looking after the interests of my co-workers.  Now I'm being asked to be a trustee for the pension fund. I've been briefed as to what that entails, but I would like to have more details about my legal responsibilities and rights, that is, if there are any rights. Can you assist with this information?

Ans:Congratulations on being asked by your peers to be a Member-appointed Trustee of your Employer’s sponsored Approved Superannuation Fund (ASF).  You are correct that your role is a legal one since the assets of the fund are in the names of the Trustees to be held in trust for the benefit of the Plan Members and their named beneficiaries.  If you have accepted the position of being a Financial Services Commission (FSC) registered Trustee, along with the briefing you have already obtained, it is hoped that the information shared in this response to your question will enhance your trusteeship role.  Robin Ellison, in his book, The Pensions Trustees Handbook, provides some excellent information for persons when they are being newly appointed as a trustee and during their tenure of trusteeship.  Although some of his recommendations will be presented as a response to your question, it is a book that is highly recommended and is obtainable from online bookstores.  To assist with the commencement of your trusteeship journey and that you carry out your legal responsibilities, you may wish to consider the following subject areas: (i) Things to do before you attend your first Trustees meeting; and (ii) Some tips on what you need to be aware of as a Trustee.

            Things to do before attending your first trustee meeting: Mr. Ellison, during his presentation in Jamaica at a pension’s seminar reminded the attendees that the first item one should obtain on becoming a trustee is a filing cabinet.  This is good advice since you will be having lots of documents to read and these documents should be stored and be easily retrievable as required: this is your individual responsibility.  Clearly, it is necessary to develop good storage conditions for all your documents and hone your reading skills.  These are particularly important since you will be meeting with distinguished attorneys, actuaries, investment managers, advisors, administrators and probably at some time you may have to meet with FSC personnel. 

Next, it is highly recommended that you obtain copies of the following Jamaican statutes and any Amendments from time to time: (a) The Trustees Act 1897; (b) The Income Tax Act 1955; (c) The Pensions (Superannuation Funds and Retirement Schemes) Act 2004 and enabling Regulations (Governance) (Investments) (Registration, Licensing and Reporting) 2006; (d) The National Insurance Scheme Act 1966; (e) The National Housing Trust Act 1967; (f) The Employment (Termination and Redundancy Payments) Act 1974.  Since you were so correct to see your role as a legal one you will need these ‘legal tools’ to help you in this role and to carry out your responsibilities in an effective manner.  In addition, these statutes will help you to be a strong link when you join your fellow trustees.  If copies of these statutes are not available to you as an expense from either the fund or otherwise, it may be useful for you to personally invest in them.  You will find very interesting information within the statutes, which will also assist with becoming familiar with the legal terms used for Jamaica’s Superannuation Funds, and not pension plans as they are commonly referred to. For example, if you review section 44 of The Income Tax Act 1955, you will soon realize, that in Jamaica, an Employer-sponsored retirement savings plan is stated as an Approved Superannuation Fund and not a pension fund while section 44A refers to Approved Retirement Schemes which is also regarded as a Superannuation Fund.  However, while a Superannuation Fund is for Employers with 10 or more Employees, a Retirement Scheme is for individuals who are not members of a Superannuation Fund.  This distinction between these two types of Superannuation Funds is also borne out in the Pensions Act 2004.  Nevertheless, you will need to know how they work under the law since most Trust Deed and Rules provide for accumulated benefits to be transferred between them: this is usually part of the design considerations of the TD&R.  Therefore, it is hoped that you will agree that your legal role requires access and knowledge of these Jamaican statutes and the TD&R. 

The statutes should not be your exhaustive list of resource material but you should also look at websites that address Superannuation Funds – I am sure you will find this search most interesting.  Enjoy the online search. 

Next, you should also get access to resource books in the following pensions and trustees-related subject areas: investing, actuarial, insurance dictionary – many of the terms used in Superannuation Funds and Retirement Schemes have their base in insurance terms, administration, membership communication, decided cases and most notably the Air Jamaica v Charlton [1999] case which was decided at the Privy Council in the UK.  For this case there is a plethora of judicial commentary that should be of interest to you and your fellow trustees.  Remember, as you rightly stated in the question, your role is a legal one and therefore to fully understand that role you must look at some decisive cases.  You can get access to this case on the Privy Council’s website and it makes interesting reading.  There are many other decided Jamaican pension cases and also others from other jurisdictions.  It is highly recommended that you and your fellow trustees review them from time to time.  It may also be wise to invite the Jamaican attorneys who acted on behalf of the parties in these cases to attend your Trustees meetings and make a presentation on the findings and how the ruling impacts on the conduct of current and future trustees.  There’s the prudent man rule, which all trustees should use as their guide and this may be a prudent act by you and your fellow trustees to have decided cases as an agenda item at your meetings. 

This is not meant to be an exhaustive list of what you need to do before you attend your first Trustees’ meeting but to provide information that you may or may not have had access to and really should do to ensure that you fulfil your role honourably and start with a basic level of understanding.  To conclude this section, in Mr. Ellison’s book he recommends the following: (a) inspect the Plan documents.  These are the Trust Deed and Rules (TD&R) and any Amendments, and keep in mind the other documents which need to be seen as per the definition of constitutive documents in the Pensions (Superannuation Funds and Retirement Schemes) Act 2004, Regulations (Governance) section 1. (b) Find out how often and when is the next trustees’ meeting.  Before you attend this meeting you should review the minutes of the last meeting.  It is at these meetings that you exercise your duties, discretions and powers that are unique to trustees.  Remember, to review the Pensions Act 2004 regarding the duties of the Trustees.  You should also keep in mind that no matter how good you and your fellow trustees may think you are, the Pensions Act 2004 section 38 provides for the members to have recourse to the Commission (FSC).  Hence, it is also good to find out when and how often there are Members meetings and what are the Membership Communication strategies currently in place. Are there any online strategies to communicate with the Members and their beneficiaries?  ‘The art of good trusteeship is efficient and competent delegation of most of your functions’ – The Pensions Trustees Handbook.  However, you will need to know what the trustees’ functions are, what can be delegated and what cannot be delegated. 

Since your appointment as a trustee is also being a part of a collective group of trustees, it is also in your best interest to find out if there are any legal proceedings being carried out at this time.  Why?  Because on becoming a trustee the law doesn’t say that because you weren’t there before the court proceedings that you are not a party to it.  You automatically become a party to the proceedings.  Hence, you should also check and get answers as to the indemnity provided in the TD&R and whether or not there is any liability insurance.  Remember, trustees can become personally liable and you will need to be protected for acts of omissions and commissions.

What you need to be aware of as a trustee: Know the meaning of certain legal terms such as: breach of duty; duties, discretions and powers; conflicts of interests; duty of care: when it is appropriate to take advice.  Not knowing these terms could make you and your fellow trustees liable for proceedings in the courts because of the legal nature of your trusteeship.  For Trustees meetings ensure that proper minutes are taken and circulated in a timely manner.  While some of your experience as a union delegate may be useful, some may not be applicable as a trustee.  For example, there is no room for applying the bargaining technique for wages and benefits that are commonly applicable to the role and function of a union delegate.  The primary function of you and your fellow trustees is to manage the assets of the trust to provide the benefits to the Plan members and their beneficiaries in accordance with the TD&R and applicable statute.  Additionally, keep in mind that the world of pensions is dynamic and there will be the requirement for the trustees to amend the TD&R from time to time.

The knowledge world of pensions and trusteeship is limitless.  It is highly recommended that you attend training sessions when they are scheduled.  It provides a great opportunity for you and your fellow trustees to hone your skills and enlarge on your knowledge.

The guiding principle for your role and responsibilities of an ASF trustee is no different from that of everyday life …. if you follow the prudent man rule.  However, today, Jamaica is operating in a highly regulated Pensions environment and there’s no room for passive trusteeship.  You must be prepared to be an active trustee fulfilling your role of providing meaningful retirement benefits for the Plan Members and their beneficiaries.  You have a wonderful opportunity to collaborate with your fellow trustees to fulfill the promises in the TD&R.  Hence, enjoy every minute of the experience and opportunity that you have been given by your peers to be a Member-appointed trustee. 

Disclaimer: The information stated above to answer your question is not a guarantee that you will achieve and fulfill all the requirements for a FSC registered trustee who has been appointed under Jamaica’s highly regulated Pensions environment.  More information is required to provide a robust response fulfilling your role and responsibilities.  Readers who are seeking a comprehensive guide on the role and responsibilities of a Superannuation Fund trustee should also obtain legal advice and information from FSC: the regulator for Jamaica’s pensions industry.