Trustees must still fulfil fiduciary duties
In the wake of the coronavirus pandemic and its negative impact on the economy, trustees of pension funds need to focus on their fiduciary duties to members.
This is the view of Michelle David, a retirement fund specialist at law firm Norton Rose Fulbright. In an article in the firm’s Financial Institutions’ Legal Snapshot newsletter, David says trustees must ensure they are well advised on the possible impact of Covid-19 on the retirement fund’s investments and seek to mitigate any losses. Mitigation must include advice from experts on best practice in light of the pandemic.
Trustees must also ensure that service to members is not too severely disrupted, and that a fund’s service providers have put in place measures to address service delivery in the face of the pandemic.
“Trustees should be considering their service-level agreements to understand their contractual rights. This will ensure that funds are able to keep service delivery on track even where service providers may have staff under self-isolation or in quarantine.
While trustees would have historically ensured that administration systems, for example, are suitable, this due diligence may not necessarily have included the ability of the provider to deliver on systems where employees are not in office. In short, trustees need to take a proactive approach to understanding the impact of the pandemic on investments and ongoing ability to do business.
Despite the impact of Covid-19, trustees will still need to ensure that they act in compliance with their fiduciary duties,” David says.