APT·TRUST-LAW · Module 1: Trust Law and the Role of the Trustee·UnitTRUST-LAW · Unit 04Access: Premium
Unit 1.4: Trustee Powers, Advisers and Protection
Unit 1.4 covers the people trustees rely on and the powers they hold. It runs through the roles of the scheme’s advisers and service providers, how those roles change when the employer or the scheme is under threat or heading into wind-up, the trustees’ power to invest scheme funds, the liabilities a trustee can be exposed to and the protections available through exoneration and indemnity provisions and insurance, the powers set out in the deed, and how those powers are balanced against the ones the sponsoring employer holds. With six topics, this is the largest unit in Module 1.
What’s in it.
6 topics- Topic 01
The Role of Advisers and Service Providers
45 questions - Topic 02
The Role and Use of Advisers Where a Scheme or Employer Is Under Threat or in Wind-Up
45 questions - Topic 03
Investing Funds
45 questions - Topic 04
Liabilities and Protections
45 questions - Topic 05
The Powers
Coming soon - Topic 06
The Balance of Powers Between the Sponsoring Employer and the Trustees
Coming soon
Sample questions
3 of manyA few questions from this unit, with the answer and a full explanation. The complete bank is available when you start practising.
Which section of the Pensions Act 1995 requires trustees to prepare and maintain a Statement of Investment Principles?
- Section 75
- Section 36
- Section 34
- Section 35Correct answer
ExplanationSection 35 of the Pensions Act 1995 requires trustees to prepare, maintain and periodically review a SIP, after obtaining and considering proper written advice and consulting the employer. Key takeaway: section 35 is the specific reference for the SIP duty.
A scheme's SIP has not been reviewed for three years and four months, and investment policy has not changed materially in that time. Has the statutory minimum review requirement been breached?
- Yes, but only if the scheme has also failed to consult the employer in that period
- Yes, because the review must occur at least every three years, and that period has been exceeded regardless of whether policy has changedCorrect answer
- No, because the requirement is to review every five years, not three
- Yes, but only because the scheme provides defined benefits
ExplanationThe three-year review requirement is a standalone minimum that applies regardless of whether investment policy has materially changed; exceeding three years without a review breaches the requirement even absent any policy change. Key takeaway: the periodic review duty is separate from, and does not depend on, the event-triggered review duty.
Order the following in a way consistent with a typical DB scheme wind-up: data cleansing, wind-up valuation, insurance buy-out. Which sequence is correct?
- Data cleansing, then wind-up valuation, then insurance buy-outCorrect answer
- Insurance buy-out, then wind-up valuation, then data cleansing
- Wind-up valuation, then insurance buy-out, then data cleansing
- Data cleansing and insurance buy-out happen simultaneously before any valuation
ExplanationData cleansing normally comes first so accurate member records underpin the wind-up valuation, which in turn informs the terms trustees can secure for an insurance buy-out. Reversing this order would mean valuing or buying out benefits based on unreliable data. Key takeaway: reliable data underpins the valuation, which in turn underpins the buy-out.