The Duties of a Pension Trustee: Lamb to the Slaughter?

Whilst it is an honour to serve as such, most trustees of a pension fund do not immediately realize that they are assuming significant duties and responsibilities. This is the case albeit most do not have – and by law are not required to have – any knowledge of or experience of pension funds or pensions law. If “story was ever to come to bump” and the trustee was called on to answer for any alleged breach of duty (without some of the protections which are mentioned below), he might be exposed for what he is: a lamb to the slaughter.

Of course, it should not be entirely surprising that the duties and obligations imposed on pension trustees are formidable. The prudent decisions of the pension plan trustees often affect, in a fundamental way, the financial provision for the retirement of dozens – maybe hundreds – of employees and their families. They deserve to have great care taken with the planning for their future and the protection of their retirement funds.

The duties and responsibilities of pension fund trustees are determined by the common or general law relating to trusts, the statute law which affects trusts and trustees, and the constitutive documents of the pension plan for which they are trustees.

Under the general or common law, a trustee under a trust is held to a very high standard. Trustees are required to act in the best interests of the beneficiaries of the trust and to use such due diligence and care in the management of the trust as an ordinary prudent man of business would use in the management of his own affairs. These duties are often broken down and stated as follows:

  • avoid conflict between fiduciary duty and self-interest;
  • obey the words and directions of the deed which established the trust;
  • act impartially between the beneficiaries;
  • exercise reasonable care and skill;
  • be ready with the accounts of the trust; and
  • take legal advice.

However, an inexperienced pension trustee will not be held responsible for a mere error of judgment if he exercised reasonable discretion and acted with diligence and good faith.

Jamaica’s new trusts legislation (the Trusts Act, 2019) has codified the common law in relation to trusts including specific provisions governing trustees.

Under the Trusts Act a trustee shall exercise such care and skill as is reasonable in the circumstances, having regard to any special knowledge or experience that he has or holds himself out as having. Those who act as trustees in the course of a business or profession have a higher duty, requiring them to utilize any special knowledge or experience that such trustees are reasonably expected to have. The Trusts Act also provides that a trustee must observe the utmost good faith and act in a prudent and responsible manner.

The Pensions (Superannuation Funds & Retirement Schemes) Act (“the Pensions Act”) and its regulations add specific responsibilities to those which exist under the general or common law and under the Trusts Act. These include provisions that pensions trustees should, inter alia: 

  • make decisions on a fully informed basis, in good faith (so, they must pose all relevant questions before making decisions);
  • regularly review the performance of any appointed agents or advisors;
  • establish and document the terms of reference, duties and responsibilities of these agents and advisors (because these agents and advisors really work for the trustees);
  • be financially prudent (arguably, this means that the trustees should be conservative in investing the plan’s funds);
  • apply to the court for the appointment of a legal representative if a member of the plan or a beneficiary is incapacitated or if a beneficiary is a minor;
  • make reasonable enquiries if pension benefits are not claimed or collected and, where the monies or benefits remain unclaimed after five years, pay the monies or benefits into the Supreme Court;
  • review policies and procedures relating to the governance of the plan at least once annually;
  • conduct at arm’s length all transactions of the plan;
  • when an actuary or auditor is unfit, remove such actuary or auditor;
  • keep all assets in respect of a plan separate and distinct from their own funds;
  • keep, maintain and safeguard in Jamaica accurate and complete records and other documents relating to the plan; and
  • ensure that written policies and procedures for the governance of a plan are in place and updated.

Notably, the duties of the trustee are of a high standard, regardless of whether the plan is a Defined Contribution (DC) or a Defined Benefits (DB) Plan. 

As pension trustees ponder the awesome duties and responsibilities placed on their shoulders, an important point for them to remember is that the ultimate responsibility falls on them and they are in charge. Although the trustees will have the assistance of advisors (usually the 4-As: Attorneys, Actuary, Auditor, and Administrators) who may have greater knowledge and experience, the trustees will be called upon to make decisions affecting the plan and will have to ensure that these professionals are doing their jobs in the best interest of the plan and its members. 

Pension trustees need to make themselves familiar with the specific provisions of the trust deed and rules of the plan, which can vary and may either specify or proscribe certain duties and responsibilities of the trustees. Trustees should ensure that they are carrying out those responsibilities set out in the trust deed, even if they are unusual. 

Very importantly, pension trustees need to know if the trust deed of the plan provides, as most do, that the employer will indemnify the trustees against liability and loss caused by the errors or mistakes of the trustees, save for those which are caused by the trustees’ willful negligence, fraud, or other similar standards. If this indemnity is absent, they should investigate the possibility of introducing the same.

Under the Trusts Act, a trustee may seek directions from the court on how he should or may act with respect to the affairs of the trust. This is an avenue that is always open to the pension trustee in the event that they prefer to get the comfort of a court order before acting on any matter which seems to them to be unclear. 

In addition to the possibility of a suit for negligence and/or breach of duty, pension trustees should remember that, under the Pensions Act, a member is entitled to complain to the Financial Services Commission (“the FSC”) if he believes that his benefits under a fund are being jeopardized. That complaint could be directed against the trustees of the plan. 

Another important warning for pension trustees is that, under the Pensions Act, an obligation for secrecy is imposed on all persons having possession of or control over any documents, information or records concerning a plan. A trustee should never disclose information about salaries or other employment details of any member to an unauthorized person.

There are now more opportunities for training in pension fund management and trusteeship than existed in 2006 when the Act was being introduced. The FSC website also contains directives and guidance on various issues affecting pension funds and trustees.

The best advice one can give to a pension trustee — and especially to the inexperienced one – is to seek out such training and learning as aggressively as possible. In a world of wolves, the lamb must seek to be transformed because “the wolf always charges the lamb with muddying the stream” (Elihu Root). The trustee must be prepared to defend himself against such charges as he can prove that he is no lamb!

Peter Goldson is an Attorney-at-Law at Myers, Fletcher and Gordon and is a member of the Firm’s Commercial Department. Peter may be contacted at or through the firm’s website This article is for general information purposes only and does not constitute legal advice.

This article is for general information purposes only and does not constitute legal advice.

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