The Pensions Regulator

Prohibition of trustees

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Criteria for 'fit and proper persons'

What standards of competence and capability does the regulator expect?

The Pensions Act 2004 contains provisions concerning the level of knowledge and understanding required of trustees. These requirements are due to come into effect from April 2006, and will apply to all trustees. However, newly appointed trustees (other than corporate, professional or expert trustees) will be given six months from their date of appointment to meet the requirements.

The Pensions Regulator has issued a code of practice on the subject of trustee knowledge and understanding.

Failure to meet appropriate standards of expertise

Trustees that repeatedly fall below the appropriate standards of knowledge and understanding required may be considered for prohibition, particularly if no attempt is made to remedy the situation.

Professional trustees - trustees who charge for their services as trustees rather than just reclaiming necessary expenses, or who hold themselves out to be experts in trustee matters - are expected to show a higher standard of expertise than lay trustees. Should such a trustee, or firm of trustees, consistently fall short of the standards that the regulator could reasonably expect from pensions professionals, they could be considered for prohibition.

Other factors affecting competence or capability

The regulator would obviously expect a trustee to be competent to manage their own affairs, and should it be drawn to the regulator's attention that, in the case of a particular individual trustee, this was no longer the case, due to absence, disease or infirmity, for example, we would have to consider their prohibition.

In such a case trustees may have powers under the trust documents to achieve this result. However, the regulator would consider prohibition if this was the only way of removing an absent or infirm trustee.

Find out more.

What standards of honesty and integrity does the regulator expect?

What standards of financial soundness does the regulator expect?

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