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Home / TRUST-LAW · Module 1: Trust Law and the Role of the Trustee
Mapped to the published PMI Award in Pension Trusteeship syllabus across 22 units and 91 topics

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Module 1: Trust Law and the Role of the Trustee

Module 1 covers the law a pension trustee works inside every day: what a trust is and how it is created, who the beneficiaries are, and how the trust deed and rules are operated and amended. It moves on to how trustees take and leave office, what fitness and properness means in practice, and how a trustee board organises itself. The largest part deals with fiduciary duties, taking and weighing professional advice, managing conflicts of interest, and the powers trustees hold alongside those held by the sponsoring employer. Unit 1.1, The Trust and Its Creation, is free to practise without a subscription. PMI publishes seven learning outcomes for the APT with no sub-grouping and no published weightings, so the five modules and twenty-two units on this site are our own arrangement of the published assessment criteria, gathered into one place for study purposes.

Questions
810
Units
4
Topics
18
Access
Free tier available

What’s in it.

4 units

Sample questions

3 of many

A few questions from this module, with the answer and a full explanation. The complete bank is available when you start practising.

  1. A DB scheme's trustees need an assessment of the scheme's liabilities and a certified schedule of contributions. Which adviser provides this?

    • The investment consultant, because liabilities are matched against invested assets
    • The scheme actuary
      Correct answer
    • The scheme auditor, because valuations form part of the annual accounts
    • The covenant adviser, because liability valuation depends on employer strength
    Explanation

    Valuing DB liabilities and certifying the schedule of contributions is the scheme actuary's statutory function under Pensions Act 1995 s.47. The other advisers support related but distinct functions: the auditor checks the accounts, the investment consultant advises on strategy, and so on. Key takeaway: liability valuation and contribution certification sit with the actuary, not adjacent advisers.

  2. Trustees delegate investment management to an FCA-authorised fund manager who then makes a series of poor but properly considered investment decisions within its mandate. What remains the trustees' responsibility despite the delegation?

    • Personally directing each individual investment decision the fund manager makes
    • Ensuring the fund manager was properly selected and is being adequately monitored on an ongoing basis
      Correct answer
    • Nothing, because delegation to an FCA-authorised manager removes all trustee responsibility
    • Only responsibility that arises if the fund manager acts dishonestly
    Explanation

    Trustees are not expected to direct each day-to-day decision after delegating, but they retain responsibility for the proper selection and ongoing monitoring of the delegate, which is distinct from, and broader than, checking authorisation status alone or waiting for evidence of dishonesty. Key takeaway: ongoing monitoring, not day-to-day direction, is what trustees retain after delegation.

  3. Why is a member's equitable interest distinct from the trustees' legal title?

    • Because members hold legal title, while trustees hold the equitable interest
    • Because equitable interest is a synonym for legal title in pensions law
    • Because the distinction only applies to DC schemes, not DB schemes
    • Because trustees hold legal title to administer the trust property, while members hold the equitable interest entitling them to benefit from it
      Correct answer
    Explanation

    This is the fundamental legal/equitable split underlying all trusts: trustees hold legal title so they can administer the property, while beneficiaries, including scheme members, hold the equitable interest that entitles them to benefit from it, even though they hold no legal title themselves. Key takeaway: legal title (administration) and equitable interest (entitlement to benefit) are held by different parties in a trust.

Frequently asked questions

4 questions
What are a pension trustee's fiduciary duties?

A trustee must act in the best interests of the scheme’s beneficiaries, act impartially between different classes of member, act in line with the trust deed and rules and with pensions law, take proper advice where they do not have the expertise themselves, and avoid putting themselves in a position where a personal interest conflicts with that duty.

How are member-nominated trustees appointed?

Occupational pension schemes must normally have arrangements under which at least one third of the trustee board is member-nominated. The scheme sets the nomination and selection process within the statutory requirements, and the same rule applies to member-nominated directors where the trustee is a company.

Can a pension trustee be removed?

Yes. The trust deed and rules usually set out how a trustee is appointed and removed, statute disqualifies certain people from acting, for example an undischarged bankrupt or someone convicted of an offence involving dishonesty or deception, and The Pensions Regulator holds powers to suspend, prohibit or remove a trustee.

Which part of Module 1 is free?

Unit 1.1, The Trust and Its Creation, is free to practise. It covers the basic concepts of a trust, how a trust is created, who the beneficiaries are, and operating under the trust deed and rules. You need an account so that your progress can be tracked, and you do not need to enter payment details.