Partner Jane Kola discusses the importance of administrators consulting legal advisers when undergoing any de-risking journey
Trustees have been urged to ensure they have their scheme rules and benefit specification reviewed by legal advisers early in the de-risking journey.
Speaking at the Pensions Age DB de-risking conference, in association with Just, Premier head of trustee secretarial services, Jay Solanki, highlighted the importance of thoroughly reviewing the key scheme documents in order to highlight any misnomers or anomalies as soon as possible.
Arguing that benefit specifications and scheme rules are ‘complex’, Solanki asked trustees to consider the “key issue” of who has actually signed off the scheme rules.
Solanki added: “The reality is you cannot expect an administrator to be responsible for legal products.”
Also speaking at the conference, Arc Pension Law partner, Jane Kola, agreed: “It’s a team sport between the administrators and the lawyers, at the end of the day administrators have often been asked to review the rules of the scheme and determine what should be providing, and they haven’t been allowed to ask scheme legal providers what they should be providing – and that is unfair.”
Kola continued: “Administrators are fabulous with data and sorting it, they are your shop window to your members, but the one thing they shouldn’t be expected to do is to work out the meaning of an obscure clause about four pages in…”
“Every scheme no matter how skilled the draftsmen, will always have some rules that are ambiguous or poorly draft to some degree”
Both Solanki and Kola also emphasised the importance of reviewing these key scheme documents early and often, highlighting the importance of clear data, and therefore a clearly defined target, in any de-risking journey.
Kola urged trustees to “grasp the nettle”, explaining: “Your benefits are your target…if you don’t know what your target is fully and properly, then you’re not going to hit it.”
The views in this article are intended for general information purposes only and should not be used as a substitute for professional advice. Arc Pensions Law and the author(s) are not responsible for any direct or indirect result arising from any reliance placed on content, including any loss, and exclude liability to the full extent. Always seek appropriate legal advice from a suitably qualified lawyer before taking, or avoiding taking, any action. If you have any questions on the points raised in the above, please do not hesitate to get in touch.