Trustees of FAS had been warned not to purchase insurance through PPF board
Trustees of schemes had eligible for the Financial Assistance Schemes, which had been warned off buying missing beneficiary insurance by the Pensions Protection Fund board. The board had announced advice on its website for FAS eligible trustees and saying it was usually against the practice of using assets for buying indemnity and or stopping insurance.
It said that such cover was not “normally needed” and it did not think it was “even necessary”. The advice also stated that trustees who wanted to purchase policies with scheme assets had to discuss it with the PPF and be able to demonstrate why the cover was needed and that both the extent and cost of the proposed cover were proportionate to the risks they faced later, before any policy was bought.
It said that the board would examine all cases on their own facts and decide whether it is appropriate for applying this policy to each such case. The PPF also added that if the board felt it inappropriate to purchase insurance, it would be issuing a direction under section 134 of the Pensions Act 2004 for ensuring compliance.
“If they were unable to insure themselves against adverse events that might emerge long after the scheme was recognized to the FAS, trustees would be very concerned about personal liability”, Consultant LCP said. In addition, we also know that the PPF board will take a similar approach to indemnity insurance for trustees of schemes in PPF assessment periods.