Money: Who would be a trustee?

Pensions: Stephanie Hawthorne looks at a dangerous job

Fancy a job where the duties involve taking responsibility for potentially millions of pounds? Where the amount you are paid is precisely nothing? Try being a pension trustee.

Trustees are solely responsible for running occupational pension schemes from 6 April 1997. They have terrifying responsibilities and face severe penalties for non-compliance. Yet no previous experience is necessary, nor are qualifications and training under the Pensions Act compulsory. And the standard rate of pay for this onerous job is nothing.

The first reaction of one trustee board when they learnt of the new rules was to resign on the spot. Indeed, there is a danger that the severe penalties for non compliance (including fines and even prison) will deter people from becoming trustees.

But Tom Ross of Alexander Clay is reassuring: "On the whole, the actual role of the trustee is essentially little different than before. It is more strictly codified in a pretty bureaucratic way."

Trustees' many duties include drawing up a statement of investment principles, studying the scheme rules, the trust deed, the most recent actuarial valuation and scrutinising the assets and the members.

They must see the pension scheme is operated in accordance with the trust deed. They must keep proper records and seek expert advice in banking, investment, legal, auditing and actuarial fields. And advisers must be appointed by trustees and not by the employer. Getting things wrong can lead to massive court fines, legal bills and compensation orders against individual trustees.

The Pensions Act, which came into force this month, requires that one- third of pension scheme trustees should be nominated by members unless alternative rules are established. If employers are seeking to opt out, they must notify the trustees no later than 5 May 1997. A small number of schemes are excluded from the new trustee nomination requirements.

Michael Harvey, chief executive of Buck Consultants a firm of independent actuaries and pension specialists, believes the introduction of member trustees "if badly handled, can lead to conflict within the trustee body, confusion, negotiation, mistrust and adverse publicity".

Rosemary Mounce, pensions and benefits manager at Geest, the fruit and vegetable importer, disagrees: "Member trustees are a great improvement, often better than management trustees who often are just doing it to get a rung up the promotion ladder.

"Worker trustees take their responsibilities keenly. And union trustees aregood with their back-up."

Any trustee without training is taking a huge risk and may not be able to discharge his or her duties satisfactorily.Employers must provide member trustees with reasonable paid time for attending meetings and for training. If you are a trustee or advise trustees, insist that you and your colleagues attend courses. The February issue of Pensions World lists all the major trustee trainers.

As well as information on tax, social security and pension law, trustees should receive briefings on their own scheme.

Some schemes may use a professional trustee. Richard Thomas of Law Debenture argues: "There should be an element on the trustee board that is independent of the company, the members, and the adviser and delegates."

Trustees should consider indemnity policies. These will normally provide cover for settlements or awards made by the courts and for legal defence costs.

For diligent and trained trustees, the rewards are great: a secure and prosperous retirement, not only for their fellow employees, but also for themselves.

Stephanie Hawthorne is editor of Pensions World