Why is PTL insurance needed?
Liability which Pension Fund Trustees face today is following the same trend as almost all other forms of managerial liability. Both in terms of potential exposures and offences, Pension Fund Trustees face the increasing nature of our society to seek recompense for failures or inadequacies.
This overwhelming burden for individuals to ‘get things right’ has been exacerbated by government intervention, such as the Myners Report, which sets out guidelines and recommendations for Pension Fund Trustees in areas such as decision making and performance management.
Pension Fund Trustees face a mass of potential offences or allegations which they would have to defend either themselves or via the company they work for without some form of insurance protection. Historically, Trust Law laid down the framework for defining trustee duties and liabilities. This was refined by case law, and ultimately enacted under the Pensions Act 1995. This has since been revamped under the Pension Act 2004.
It is important to note that trustees are also subject to responsibilities detailed in the Financial Services Act 1986, Income and Corporation Act 1988, Data Protection Act 1998 and the Contract (Rights of Third Parties) Act 1999.
This plethora of statute has ensured that trustees now have a mass of potential exposures, including (but not limited) to the following:
- Administrative error
- Improper advice
- Violation of scheme documents
- Denial or changes to benefits due
- Misleading disclosures or advice
- Default on obligations to contribute to the scheme
- Conflicts of interest