Fundamentally, a pension trustee owes duties of honesty, loyalty and good faith to the beneficiaries of a plan, a duty to administer the trust with care and skill, and a duty to ensure compliance with the terms of the trust.
A breach of trust may arise where a trustee does something he is not entitled to do, or fails to do something he is required to do, under the trust deed or law.
Breaches can cover unintentional administrative errors as well as negligent, fraudulent or dishonest actions, or if a trustee fails to discharge his duties with care and skill and the members suffer loss as a result.
All trustees – other than professional trustees – regardless of who appointed them, are volunteers who usually, at least in the Jamaican context, have no prior experience in the areas of trusts or pensions.
It is critical that the constitutive documents of pension plans have broad trustee protection provisions, particularly as it may serve to attract and retain the most qualified candidates to serve as trustees and protect trustees from innocent mistakes. There are five main types of protection – pre-emptive court approval; exemption clauses; indemnity from the sponsor and/or plan; liability insurance; and the Trustee Act.
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