Irish Pensions Magazine Spring 2015
10
Advertorial
Feature
Data for DC is usually better than DB because the
Schemes are generally more recent. The problem
is that if it’s wrong, the ramifications are usually far
worse because of monthly allocations of contributions
at changing unit prices. If there’s a systemic issue then
it can be applied across a large number of members.
Ensuring members have the information they need to
make informed choices is increasingly onerous with
the new options and therefore there is an obvious
potential comeback on the trustees. This applies to
both investment choices and decisions when taking
benefits and effective accurate communication is
paramount. Trustees need to decide who is going to
deliver this and how?
There may also be potential problems involving scams
for which the trustees could have responsibility if they
pay money to an inappropriate vehicle.
A recent claims example, which was covered under the
Policy, involved an Insured who had failed to ensure
pension benefits were transferred to the requisite
investment schemes. Scheme members opted to
transfer their benefits from one fund to another and
their completed documentation was received by
the Insured. All of the Scheme members requested
that their accrued benefits be invested in a variety of
equity funds. Unfortunately the Insured overlooked
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the documentation and the funds languished in
a cash account and failed to benefit from large
equity gains over the given period. The Insured’s
maladministration resulted in losses exceeding £450k
which figure could have been very much greater if
more members had been affected or if more time
had elapsed before the error had come to light.
Insurance therefore can play an important role in
protecting trustees, pension scheme assets and
the balance sheet of the sponsoring employer. By
purchasing a properly drafted insurance policy,
trustees can be confident that they have protection
against the liabilities that might arise in performing
their duties while also giving members comfort that
their interests are being looked after properly.
Article Author
Jonathan Bull
Chief Executive
OPDU Limited
