A Corporate Trustee is defined as a company, authorised under law to act in a fiduciary capacity on behalf of individuals or companies.
In the UK, a pension trust can be regarded as a fund of money or collection of assets such as property, normally but not always, contributed to by both an employer and employees. The proceeds from that fund are then used to provide the beneficiaries, normally employees, with their pension rights upon retirement. In order to protect the interests of the beneficiaries, the pension trust will appoint one or more people or companies, as ‘trustees’ of that trust.
A corporate trustee in the context of pension schemes therefore, is a company charged with the smooth running of a pension scheme. The directors of such companies are typically independent, meaning that they are in no way related to the Trustor (otherwise known in the UK as the Settlor) of the Trust, or to its beneficiaries.
This independence is extremely important; there is a fundamental difference in the objectives of employer-sponsored trustees, who typically want to minimise payments to pension schemes, and employee-sponsored trustees, who want them to be maximized. Having no association with either party allows independent trustees to act as a mediator between the two.
It should be recognised that, an independent trustee will not be around forever and may well be outlived by the trust. If this is the case, others can be appointed to the role; however this can bring about a number of issues including inconsistency in knowledge and expertise of the particular pension trust.
The ideal solution therefore, is for a pension trust is to appoint a corporate trustee, where such issues are much less likely to be a problem.
Tags: Social Issues, United Kingdom, pension trust, pension schemes <BR/>