Key takeaways
- Pension trustee insurance is necessary to protect trustees against a personal liability whist undertaking their duties on behalf of a pension scheme
- Protection for civil, criminal, and regulatory allegations for investment oversight, scheme governance, compliance and breach of fiduciary duty
What is Pension Trustee Liability Insurance?
Trustees can therefore be exposed to significant personal liabilities, which means they personanly become the targets of litigation, regulatory investigations, fines, and compensation claims.
The cover will pay for legal defence costs, insurable fines, regulatory investigations, and damages arising from any court judgment, award or settlement. Additional cover such as mitigation costs and media costs can be made available.
"It's recommend you speak with a specialist insurance broker such as ourselves about your needs. We have access to a wide range of insurers which can provide competitive cover for both PTL Insurance and Wind-up Pension Liability Insurance"
Who's covered?
- Individuals will include any natural person acting as a trustee, director, officer, employee, board member, or committee member, whether current, future and past.
- Entities will include any pension schemes and benefit plans themselves, as well as the sponsoring employer, and corporate trustee.
What's covered?
Wrongful Act means any wrongful act or omission, error, misstatement, misleading statement, neglect, maladministration, breach of duty or breach of trust committed, attempted, or allegedly committed or attempted.
- Defence Costs - reasonable costs, expenses, charges and fees (including, but not limited to, lawyers’ fees and experts’ fees);
- Damages - including awards of claimant’s costs and sums payable pursuant to any settlements
- Investigation Costs - legal costs and expenses as a result of an investigation by a regulatory body
- Mitigation Costs - reasonable costs incurred with the Insurer’s prior written consent to mitigate a future claim
- Media Costs - reasonable costs and expenses of a PR to advise an insured person or corporate trustee
- Non Criminal Fines and Penalties - imposed by the UK Pensions Regulator, Determinations Panel, Pensions Ombudsman or Deputy Pensions Ombudsman
What's excluded?
- Funding shortfall to meet future pension payments unless caused by a wrongul act
- Criminal fines or penalties, or which are not insurable by law
- Cyber related events, which should be covered under cyber insurance
- Bodily injury and property damage
The importance of Pension Trustee Liability Insurance
Taking on the role of a trustee is an important responsibility and should not be taken lightly. Trustees have a range of responsibilities, which includes investment oversight, scheme governance, compliance and fiduciary duty to protect the interests of the members.
Read about charity trustee indemnity insurance
What if the sponsoring employer provides indemnification?
- the ability for the sponsoring employer to provide indemnification (for example, the company enters into administration); and
- the trust deed cannot provide protection against claims from third parties or regulatory proceedings.
The importance of regular reviews
Underwriters would like to see a comprehensive understanding of the type, size and funding levels of the schemes under management. To obtain the most competitive quotes we recommend you submit copies of the following with your application:
- Schedule of the pension schemes that require cover
- Latest report and accounts for each pension scheme
- Latest actuarial report for each pension scheme
Cyber security
Pension trustees should familiarise themselves with the regulators guidance and ensure they meet the regulators expectations.
About the author
Simon Taylor is a respected senior industry professional and a Chartered Insurance Broker with over 20 years’ of experience in the commercial insurance sector as an underwriter, broker and director.