The Pensions Regulator

Guidance for trustees

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Your advisers

Running a pension scheme is a complicated business. You will rely on others to carry out tasks for you and you will often need to take specialist advice. By law you are required to appoint various 'professional advisers' to assist you in running the scheme.

As a trustee, you will need to work with a range of advisers. This section of the guidance describes the various types of adviser and your relationships with them:

• Understanding the role of advisers
• Advisers required by law
• Appointing and removing professional advisers

See also the Trustee toolkit, in particular the module covering the Trustee's role.

Understanding the role of advisers

You should make sure you understand what help and advice you can expect from your different advisers and service providers – in particular, the type of advice they can, and will, give you and the limits of that advice. You can ask them, for example, whether they can:

• explain which parts of the law affect your scheme;
• help you comply with the law; (in some instances, for example in relation to some aspects of scheme funding, you are required to seek the advice of an adviser before reaching a decision); and
• tell you when and how to get more expert help.

You should also check that all your advisers and service providers have the knowledge and experience they need to do their job properly. Some advisers must have professional qualifications and meet professional obligations in order to act.

You should always feel that you can ask your advisers to explain if you do not understand something, and that you can question or challenge them if you do not agree with what they are saying. You do not always have to follow the advice they give but if you choose not to, you may be called upon to justify your decisions by the members of the scheme or by the regulator.

Delegating trustee duties

In some circumstances trustees are allowed to delegate their duties to suitably qualified people, but you still retain the overall responsibility for the actions taken. That is why it is important that, whenever you delegate one of your duties, you have procedures in place to monitor the performance of the person acting for you. You should also make sure that you are told when mistakes happen or problems arise.

Conflicts of interest

Where Trustees appoint advisers to the scheme, it is important that they establish that any such appointment and subsequent advice is independent. Trustees should request that any real or potential conflicts should be disclosed to them – Trustees also need to ensure that adviser conflicts are managed.

Your advisers' duty to report breaches of the law

If any of your advisers, or anyone involved in the administration of the scheme, reasonably believes that there has been a breach of the law relevant to the administration of the scheme, and that this breach is likely to be of material significance to the Pensions Regulator, they have a legal duty to report it to us.

Our code of practice - Reporting breaches of the law - tells you more.

Advisers required by law

The Pensions Act 1995 requires the trustees to appoint certain 'professional advisers' to carry out specific tasks in relation to the scheme. Trustees can only rely on advice from professional advisers who have been properly appointed.

The principal types of professional advisers, and their roles, are described below.

The scheme auditor

Nearly all schemes must have a scheme auditor to:

• prepare the auditor's statement about the contributions payable to the scheme; and
• if required, audit the scheme's accounts.

The scheme auditor may be an individual or a firm.

Our guidance on the auditor's statement and audited accounts gives more information on these requirements.

The scheme actuary

Schemes with a defined benefit element must also have a scheme actuary to provide advice on all aspects of the funding of the scheme. This includes:

• advising before taking important decisions which relate to scheme funding such as on the content of the statement of funding principles or the schedule of contributions;
• certifying the calculation of the technical provisions;
• preparing actuarial valuations at least once every three years. This places a value on the scheme's liabilities which can then be compared to the value of the assets;
• working out what contributions need to be paid to the scheme in future, after taking account of any surplus or deficit, and certifying the schedule of contributions;
• calculating transfers out of the scheme and for calculating members' benefits on transfers in; and
• advising you on the implications for scheme funding of events affecting the scheme, and on options for members' benefits.

The scheme actuary must be an individual, although they will usually work for an actuarial firm or an insurance company.

Other professional advisers

Your scheme may also need:

• a fund manager – to look after the day-to-day investment of the scheme's assets for you;
• a custodian to look after the scheme's assets;
• a legal adviser.

Appointing and removing professional advisers

You are legally required to formally appoint certain advisers. But it is good practice to appoint all advisers and have a formal agreement with them, including where the employer provides any administration services.

You must follow the procedures set out in law for appointing and removing professional advisers.

Appointing advisers

The appointment of the scheme auditor, scheme actuary and any other professional advisers must be writing. The letter of appointment you send to the adviser must mention:

• the date the appointment begins;
• to whom the adviser will report; and
• who will give instructions to the adviser.

The adviser must acknowledge the appointment in writing within a month. They must also confirm that they will tell you about any conflict of interest that affects their role as soon as they become aware of one. The appointment is not legally effective until you have received this acknowledgement. You should not backdate the appointment.

You can find example letters of appointment and acknowledgement in the professional guidance notes issued to auditors.

Removing and replacing advisers

You can remove an adviser by giving them written notice of when their appointment will end.

If you remove a scheme auditor or a scheme actuary, they must give you a written statement about any circumstances related to their removal which they think could significantly affect the interests of scheme members, prospective members or others entitled to benefits under the scheme. If they are not aware of any such circumstances, they must give a declaration saying so. If the scheme auditor or scheme actuary resigns, they must give you the same statement or declaration.

A replacement scheme auditor or scheme actuary must be appointed within three months. You must give the new adviser a copy of the previous adviser's statement or declaration and also include it in your next trustees' annual report. 

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