General insurer ACE European Group has warned that growing concerns in relation to the personal liabilities faced by pension fund trustees, fueled by the lack in knowledge and understanding of scheme law funding and investment strategies among consumers, could potentially deter individuals from becoming trustees in the future.
Using statistics compiled from a survey conducted at a National Association of Pension Funds (NAPF) conference, ACE revealed that 30% of those questioned said they would now not take up a trustee role because of the potential liability exposure created by the Pensions Act 2004 Trustee Knowledge and Understanding requirements.
Meanwhile, over 40% of respondents indicated that, if they were considering trusteeship now, they would only do so if there was trustee liability insurance cover already in place.
Commenting on the responses, Emma Watkins, pension trustee liability insurance specialist at ACE, said: The survey, one year on from the publication of the ‘Trustee Knowledge and Understanding Code of Practice,’ clearly shows that personal liability has become a growing concern amongst pension trustees. As a result, the availability of trustee liability insurance has become an important issue for individual trustees.
ACE also revealed that 35% of respondents felt that liability insurance should be mandatory for trustees, while a further 27% felt that the regulator should be taking decisive action to educate trustees and employers about the type of cover and availability of liability cover so that they could make an informed choice.
Ms Watkins added: What we have seen over the last two years in our discussions with trustees is a real, measurable shift in attitudes to their personal exposure to potential litigation. ACE would welcome any action to better inform trustees of their liabilities.