Pension Trustee Liability Run Off Insurance

Run off Cover for Schemes ‘Winding Up’

Whilst the Sponsoring Employer relinquishes responsibility for the Scheme upon ‘Wind Up’ or Dissolution, the same cannot be said for the Trustees, as they remain personally responsible for their past actions. Due to the ‘claims made’ nature of any Policy, it is essential that long-term Run Off cover is purchased to protect the Trustees for these past actions.

Policy durations can be arranged for anything from 6 to 15 Years, with a limited number of Insurers offering ‘lifetime’ cover.

Indemnity Limits are available from £100,000 to more than £50M, depending on the requirements and the size of the Scheme. When considering the appropriate level of cover, it is important to understand that the limit will be in the ‘aggregate’ (inclusive of any defence costs) for the overall Policy period. This is the total amount of cover provided, meaning that the indemnity limit is eroded by any payment made by the Insurer(s).

Consideration must also be given to the longevity of the Policy, i.e. what seems like adequate cover now may not be so in 10 or 15 years’ time.

The Policy provides vital cover for the legal costs in defending a claim, even if the claim is unjustified.


Overlooked Beneficiaries Insurance

Schemes may suffer from poor data issues – this could be the result of previous bulk transfers following corporate acquisitions, or simply due to inaccurate historic record keeping. If the Scheme’s data is incomplete or missing, the Trustees may not be able to rely on Section 27 of the Trustee Act 1925 to provide an exoneration from liability, particularly if they had ‘no knowledge’ of something that previous Trustees had been notified of.

Overlooked (missing) Beneficiaries Insurance (OBI) is therefore an important consideration for Schemes approaching Wind Up. Some Policies provide OBI cover as a sub-limit (inner limit) within a Run Off Policy Wording. However, other Insurers are able to offer OBI cover under a separate wording, meaning that coverage levels can be bespoke to the Trustees’ individual needs.



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Frequently Asked questions

We have compiled a list of frequently asked questions and answers. But if your question is not listed, do call or email us.