UK - Discretionary powers of pension trustees run counter to what modern society expects, ombudsman David Laverick believes.
Trustees currently have the power to decide issues - benefits for unmarried partners, for example - arbitrarily without the requirement to explain how they came to their decision.
Laverick noted his surprise that some case law may well sit uneasily behind modern day expectations, particularly in cases of the discretionary powers of trustees.
Laverick said: “Pension trustees do not need to give any reasons for the exercise of their discretionary powers and that seems to generally run counter to what modern society expects.
If people are taking decisions that might effect them they expect to have a reasoned explanation for these.”
His comments enforce those made by industry experts who have voiced concern that pensions legislation is too archaic and complicated.
Laverick was keen to endorse the government’s pensions simplifications initiative, unveiled last month which is headed by former NAPF chairman Alan Pickering.
Laverick said: “I support the idea of simplifying pensions [legislation] and we will be making representation to the simplification review .”
The ombudsman confirmed that he had not had to deal with any determination where the issue of discretionary trustee powers had been a factor, and concluded by revealing a central tenet of his philosophy as the ombudsman. He said: “I start from a premise that good administration requires a reasoned decision.”
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