Pension Trustee

tamste

My friend has just asked me to be a trustee of their personal pension. 
I won't be agreeing unless I know what I am letting myself in for and am happy with this, but need to be careful as this is a friend.

All this is new to me, so any advice would be very welcome.

Thanks

Brynsam

Leave well alone. Sounds as if your friend doesn't know what they're doing and you certainly don't. Plead the ignorance card for your own protection, but claim you are doing it for their benefit because you don't have the right knowledge/skill set.

Marcon

I doubt this is a personal pension - more likely to be one of the specialist forms of provision for, say, a company director and either you/they/both of you don't understand the difference - but you don't want to go near it, given the risks and personal liability which could be involved if you get it wrong. 

bowlhead99

Inevitably they want a pal to be the trustee because it will save them money and red tape over appointing a professional, either:

(a) because the professional would want to get paid for the risk taken on and the knowledge of regulations and good practice that's required to exercise the diligence of a reasonable professional business person in exercising the fiduciary duties, or

(b) because the professional might have 'house rules' about not approving of certain types of investments or transactions, or

(c) because working with professionals who aren't your mates can require discipline and paperwork and organisation skills which your friend can't be bothered with.

It is somewhat inevitable that at some point your friend would want you to sign some paperwork in relation to a transaction or activity of the pension fund that you are not 100% sure of or comfortable about, knowing that if you approve something in your capacity as trustee  which turns out to be the wrong thing to do, you may carry legal responsibility for either breaking rules or causing damage to the value of the pension in some way. 

And that inevitable occurance will lead to friction in the relationship because any uncertainty or reluctance to 'nod along with' anything your friend wants to do 'with my own money' would be a huge act of party-pooping, at which point your friend will accuse you of financial terrorism or holding him to ransom over what he can or can't do with the money in his own private fund which is now legally controlled or co-controlled by you as trustee.

Do NOT insert yourself between your friend and their retirement savings. Just say 'Sorry, no'.

Ultimately your friend should prefer you to say up front that you are not comfortable with being a pension fund trustee, than saying now you'll do it but then later having second thoughts about continuing to do it or about signing off on some bit of paperwork or transaction. Aside from the legal risk you take on, once you initially say 'OK this seems easy, I'll do it', you lose all hope of later saying 'actually I dont want to do this' or 'I don't understand the risk involved in this investment' or  'actually I don't think you should do that transaction' without causing a relationship-damaging level of annoyance to the party whose pension money or assets you're talking about. 

If your friend doesn't understand why you won't help them, show them this thread, in which you sensibly asked for some guidance on helping out your friend, and several different anonymous strangers from all walks of life were united in the view that a) you should not touch it with a bargepole and
b) your friend should be understanding about it and find some other more gullible mug within their circle of friends instead, or alternatively just use some of the pension assets to pay for a professional.

dunstonh

My friend has just asked me to be a trustee of their personal pension. 

It is unlikely it will be a personal pension if they are going with a trustee scheme.  

Personal pensions do not require individuals as trustees.   There are pension types that can do this but they are very niche.  It not at all mainstream.   It is also an area that has been open to some abuse in respect of fraud and scams.    if could be that your friend is being scammed and doesn't realise it.  It could be that they do have a justification for running a pension type that probably less than 1% of the population have a justifiable need for.

I won't be agreeing unless I know what I am letting myself in for and am happy with this, but need to be careful as this is a friend.

You have a legal liability and can be taken to court for failing in your duties.   You could potentially face protection if you do something wrong, even if you didn't know you were doing something wrong and were used by another party because of your naivety.

NottinghamKnight

dunstonh said:

My friend has just asked me to be a trustee of their personal pension. 

It is unlikely it will be a personal pension if they are going with a trustee scheme.  

Personal pensions do not require individuals as trustees.   There are pension types that can do this but they are very niche.  It not at all mainstream.   It is also an area that has been open to some abuse in respect of fraud and scams.    if could be that your friend is being scammed and doesn't realise it.  It could be that they do have a justification for running a pension type that probably less than 1% of the population have a justifiable need for.

I won't be agreeing unless I know what I am letting myself in for and am happy with this, but need to be careful as this is a friend.

You have a legal liability and can be taken to court for failing in your duties.   You could potentially face protection if you do something wrong, even if you didn't know you were doing something wrong and were used by another party because of your naivety.

I think auto correct may have changed prosecution to protection, very different meanings!

dunstonh

NottinghamKnight said:

dunstonh said:

My friend has just asked me to be a trustee of their personal pension. 

It is unlikely it will be a personal pension if they are going with a trustee scheme.  

Personal pensions do not require individuals as trustees.   There are pension types that can do this but they are very niche.  It not at all mainstream.   It is also an area that has been open to some abuse in respect of fraud and scams.    if could be that your friend is being scammed and doesn't realise it.  It could be that they do have a justification for running a pension type that probably less than 1% of the population have a justifiable need for.

I won't be agreeing unless I know what I am letting myself in for and am happy with this, but need to be careful as this is a friend.

You have a legal liability and can be taken to court for failing in your duties.   You could potentially face protection if you do something wrong, even if you didn't know you were doing something wrong and were used by another party because of your naivety.

I think auto correct may have changed prosecution to protection, very different meanings!

You are correct.   Prosecution is what it should be.