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
45 questions - Topic 06
The Balance of Powers Between the Sponsoring Employer and the Trustees
45 questions
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.
What protection does section 67 of the Pensions Act 1995 give to subsisting rights?
- It applies only to schemes that have already entered wind-up
- It restricts the use of a power of amendment to detrimentally modify subsisting rights without appropriate consent or actuarial confirmationCorrect answer
- It requires the employer alone to approve any change to subsisting rights, without any trustee involvement
- It transfers responsibility for subsisting rights entirely to the Pension Protection Fund
ExplanationSection 67 restricts, rather than absolutely prohibits, detrimental modification of subsisting rights, requiring appropriate consent, actuarial confirmation, or another statutory route, rather than transferring responsibility to the PPF, requiring only employer approval, applying only on wind-up, or requiring auditor certification. Key takeaway: section 67 is a conditional restriction, not an absolute ban.
What does it mean to say that a genuinely discretionary power must be exercised "fiduciarily"?
- It must be exercised in good faith, for a proper purpose, with genuine and informed consideration of relevant factorsCorrect answer
- It must be exercised without any documentation of the reasoning involved
- It must be exercised only by a professional corporate trustee, never a lay trustee
- It must be exercised only after obtaining the sponsoring employer's written consent
ExplanationExercising a discretion fiduciarily means acting in good faith, for a proper purpose, and with genuine, informed consideration of relevant factors, not simply following a member's request, requiring a particular trustee category, or requiring employer consent as a general rule. Key takeaway: the fiduciary standard is about the quality and integrity of the decision-making process itself.
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.