As we all adjust to working remotely, minimising travel and practising social distancing, pension scheme trustees face the additional challenge of managing their pension scheme. This Q&A considers practical points for holding trustee meetings.
- Given that we can’t hold a face to face meeting, can we hold a meeting by conference call?
You will need to check your governing Trust Deed and Rules to see whether meetings may be held remotely. Any options are usually specified in the trustee administration/meeting provisions. The most usual references are to conference calls. Platforms that allow visual access such as Zoom, or WebEx are unlikely to be specifically listed, but would constitute a conference call as long as an audio connection is made and maintained.
If there are no suitable provisions, then amendment of the Rules may be required, and your usual legal contact will be able to assist.
Any specific requirements such as notice periods, agendas and who should attend should be followed as if the meeting is a face to face meeting. You may find that your advisers are able to assist with conference call lines and face to face online platforms. Trustees’ contact details should be confirmed and updated.
Quorum requirements, outlined in question 2, will need to be met. If someone’s connection to the meeting is lost, it may mean that the meeting is no longer quorate. You should ensure that all the trustees can hear the discussions when taking specific decisions.
You will also need to ensure that minutes of the meeting are still taken. The minutes serve as a record of actions agreed and decisions taken. The minutes should be circulated in draft form after the meeting so that the trustees can agree that they reflect what was discussed and agreed.
There may be some practical difficulties if attendees do not have access to the necessary hardware or software. Employers may be willing to assist just as they might have covered travel costs. Some scheme rules may also have general provisions around employers covering trustee’s reasonable costs and it may be possible to use this to arrange connectivity. A trustee who however remains uncontactable could if absolutely necessary be removed as a trustee temporarily to allow the remaining trustees to act.
- Some of our trustees are on sick leave, can we hold a meeting without them?
When conducting a remote meeting, you still need to ensure that the meeting is quorate. In other words, there are the minimum number of trustees required to be present so that decisions and actions taken at the meeting are valid.
Your pension scheme rules may specify a required number or percentage of trustees to form a quorum. You should check whether there are specific categories of trustee required. For example, the rules may say that three trustees are required for a quorum but, of those, one must be a member nominated trustee (“MNT”).
If your scheme rules are silent on what constitutes a quorum, a majority of all trustees in post at the time of the meeting would be a sensible default. That allows the trustees present at the meeting to legitimately claim that decisions were taken by a representative body of all the trustees.
If it is not possible to achieve a quorate meeting, business can still be discussed but any decisions may not be binding. The scheme rules may contain a provision for decisions taken at an inquorate meeting to be subsequently endorsed, and therefore made binding, by agreement of a sufficient number of trustees who, had they been present, would have made the meeting quorate.
Schemes with sole corporate trustees should look to the company’s articles of association to determine quorum.
- Our Chair is unavailable, does that mean we should cancel the meeting?
No. Trustees have powers, usually by majority vote, to appoint a different chair for a meeting if your usual chair is unavailable. This can be done at the start of your meeting, or in advance. You will need to check your scheme rules (or Articles of Association for a corporate trustee) for your scheme’s powers.
- One of our trustees is self-isolating, can they still join the meeting?
A self-isolating trustee may be able to access meetings remotely, but they may be restricted in terms of signing or executing documents. It might be appropriate then to temporarily remove isolating trustees so that documents can be signed by “all the trustees” if necessary. Removal of an MNT would require agreement of all the trustees.
It is important to remember that trustees do remain liable individually for all the activities that the trustee body undertake whilst they are a trustee so an isolating trustee not accessing meetings remotely should be provided with updates and reports on activity keeping them up to date as regularly as possible.
- Some of our trustees are going to be unavailable for some time, can we act without them?
Where you are concerned that, because of potentially prolonged absence or unavailability of trustees, a quorum may not be achievable in the longer term, you may wish to consider the appointment of additional trustees.
The scheme rules will again set out the appointment process and which party – the employer, the trustees or both – has the power to appoint. The rules may also set out a maximum number of trustees or require a certain number of trustees from different sections of a scheme. Invariably a deed will need to be executed to formally make such an appointment.
The requirement under the Pensions Act 2008 for at least a third of all trustees to be MNTs must still be adhered to. Where appointment of a new trustee results in MNTs making up less than a third of all trustees, a new MNT nomination process should commence. However, the legislation allows administration of pension schemes to continue without the required number of MNTs provided efforts are taken to fill any MNT vacancy.
Other solutions involve the use of trustee sub-committees or delegation of trustee powers which we will come to in part 2 of this article.
Actions to be taken
So while it is not quite business as usual in the current circumstances, it should be possible to continue with trustee meetings as scheduled. Your scheme sponsor may be taking action in response to the Covid-19 crisis so it may be that further meetings are needed as well as any regular meetings.
In Part 2 of this update we will look at alternatives to meetings and some of the challenges around signing documents. In the meantime, if you have any questions, please contact your usual pensions contact.