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Working with advisers

Make sure you have the right people to help you run and make appropriate decisions about your defined benefit pension scheme.

As a trustee, you’re ultimately accountable for these decisions so it’s important that you put processes in place to monitor the actions of your advisers and service providers.

Key points

  • Ensure you have a scheme actuary, scheme auditor and any other advisers and service providers you need to help you run your defined benefit (DB) scheme.
  • Make sure you have controls in place for appointing and managing ongoing relations with advisers and service providers.
  • Ensure that you understand how your advisers manage conflicts of interest.

Types of advisers

As a trustee you have overall and ongoing legal responsibility for the administration, management and investment decisions within your DB scheme. However, you must have a scheme actuary to carry out valuations and advise on issues such as transfer values.

You must also appoint an auditor to audit scheme accounts.

You may need to appoint other advisers and service providers including:

  • administrators
  • fund managers and investment consultants
  • accountants
  • lawyers

Appointing advisers and service providers

You should evaluate how suitable all advisers and service providers are before you appoint them. Make sure they have the appropriate level of skill and knowledge to carry out the duties allocated or delegated to them. Also make sure that you understand the information your advisers will need to fulfil their roles.

When appointing an administrator, we encourage you to establish whether they have obtained independent voluntary accreditation, such as the accreditation standard offered by the Pension Administration Standards Association (PASA). If accreditation has not been attained or explored, find out why, and whether there are plans to apply for accreditation in the future. Independent accreditation can assist you in being confident that a high standard of administration, whether in-house or third party, is being provided.

You need to establish and document controls to manage the appointment of advisers and service providers and the delivery of information, advice and services they provide. You also need to establish and review what procedures and controls your advisers and providers have in place to ensure they provide a quality, accurate service.

You should ensure that clear, comprehensive contracts are drawn up. Contracts should set out the terms on which the advisers or service providers are appointed.

You should ensure that any notice period and exit fees are reasonable and make sure there are arrangements for releasing information back to you and to any new adviser or service provider within a reasonable timescale. You should also be clear about who pays to correct errors.

If you decide not to appoint an adviser but undertake analysis yourself, you must be satisfied that you’re sufficiently able, independent and experienced to do so.

Managing ongoing relations

You should have controls in place to ensure you maintain an effective working relationship with all your advisers and service providers. This should include a process to regularly evaluate their performance and service.

You should make sure advisers have access to information from trustees and other advisers so that, where appropriate (eg when assessing employer covenant, investment and funding risks as part of the scheme valuation process), they can help you to assess risks in an integrated manner.

When deciding whether to change an adviser or service provider, you should consider any risks, practical difficulties and costs to members as part of your decision-making process.

When changing your administrator, well-documented procedures will aid a smooth transition. You may wish to establish whether or not your administrator adheres to the PASA Code of Conduct on Administration Provider Transfers.

Conflicts of interest

You should ensure that your advisers have processes in place to manage conflicts of interest and that you understand how these work in practice. Go to conflicts of interest.

Trustee toolkit online learning

The ‘Running a scheme’ module contains tutorials on ‘Introducing advisers and service providers’ and ‘Appointing advisers and service providers’. You must log in or sign up to use the Trustee toolkit.

Go to the Trustee toolkit