ACE’s London office announced that it is responding to the growing concerns of UK pension trustees by launching an enhanced “Pension Trustee Liability” insurance product.
ACE noted that “pension trustees are facing both a significant increase in liabilities arising from the Pension Act 2004 and a greater threat of litigation.” The company said it will “provide greater protection for trustees by significantly broadening the existing coverage and benefits provided through its Elite pensions trustee liability product.
“In particular, trustees need protection in respect of liabilities resulting from the statutory requirement to have appropriate knowledge and understanding of pensions, trust law, scheme funding and investments. As a consequence of the Pension Act 2004 requirements, there is a heightened risk that trustees may breach these increasingly complex responsibilities and consequently find their personal assets at risk, or in certain circumstances, find themselves liable for civil and criminal penalties.”
ACE said its Elite policies extended cover “now includes a unique legal representation expenses feature associated with official or fact-finding investigations by a regulatory body such as the Pension Regulator. In addition, cover is available for maladministration, financial loss resulting from damage, loss or destruction of documents, and emotional and mental distress awards determined by the Pensions Ombudsman or Pensions Regulator. The policy can also be tailored to include retired trustee protection, cover for fines and civil penalties and continued protection for member-nominated trustees in the event of fraudulent non-disclosure or misrepresentation.”
The company also noted that as a “leading specialist provider of pension trustee liability and directors and officers liability insurance,” it “has conducted its own research amongst pension trustees on their views of the impact of the 2004 Pensions Act, and its possible impact on the personal liabilities of trustees.
“Almost half of trustees questioned believed a statutory requirement for knowledge would put the onus on the sponsoring employer to ensure trustees were adequately protected. When asked whether they would become a trustee now, based on their knowledge of new requirements in the Act, a significant majority said they would only do so if trustee liability insurance cover were in place. A third of respondents believed that sponsoring employers would be more likely to purchase liability cover in an effort to attract the right personnel to take on the role of trustee.”
According to Emma Watkins, ACE’s pensions specialist: “ACE’s research amongst pension trustees has revealed a deep concern that the specific requirements for a greater knowledge and understanding of the legal and financial aspects of pension funds are excessive, and perhaps most worryingly, a large number would only take on the role of a trustee now if specific liability protection was in place. At a time when legislation and litigation are on the increase, ACE Elite’s pension trustee liability insurance provides trustees and employers with the added confidence to perform their roles, secure in the knowledge that they have sufficient protection. ACE is committed to addressing the evolving needs of trustees through adapting product coverage and providing valuable information on avoiding potential exposure to claims through greater information and understanding of their liabilities.”
ACE Elite Pension Trustee Liability insurance provides cover for trustees, employees, sponsoring employers, pension funds and corporate trustees. The product was formerly known as Privilege. Elite offers limits of liability ranging from £500,000 to £15 million ($907,000 to $27.2 million).
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