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OPDU Report 24
- May 2008
Bulletin Board
OPDU - Protecting Pension Funds
OPDU protects pension funds by providing unique insurance cover to
trustees, administrators and sponsoring employers. Pension funds
holding total combined assets in excess of £115 billion have joined.
The membership ranges from large funds to small.
OPDU’s members can readily purchase limits of cover between
£1million and £30 million. The cover has been developed for the
special insurance needs of pension funds but can be varied to meet
the specific requirements of individual schemes.
OPDU affords a valuable external re-source for reimbursing losses
suffered by pension funds. The asset protection thereby given is
ultimately of benefit to pension fund members.
In accordance with our clearly stated objective of helping to raise
standards in pension scheme administration, we offer a confidential
Advisory Service and assist trustees with a risk-based approach to
their duties.
OPDU’s unique structure includes The Advisory Council. Elected by
the membership, The Advisory Council’s function is to ensure that
the services and insurance provided continue to meet the
changing needs of members.
OPDU is managed by Thomas Miller, the world’s leading independent
manager of mutual insurance companies, including schemes for
professionals such as barristers, solicitors and patent agents.
OPDU’s insurance cover is underwritten by ACE European Group Ltd.
Insurance Cover
Who is insured
To achieve our aim of insuring everyone who might become liable for
a loss as a result of internal maladministration of the pension
fund, the insured has been broadly defined to include:
- Trustees
- Corporate Trustees
- Directors of Corporate Trustees
- The
Pension Fund
- Sponsoring Employers
- Internal Advisers
- Internal Administrators
- Internal Dispute Managers
This helps to reduce internal conflicts and eliminate disputes
between insurers representing different interests.
What is covered
To achieve our aim of providing an external resource for reimbursing
losses suffered by the pension fund, even in some circumstances
where no person is legally liable for the loss, the cover provided
is broad and includes:
Errors and omissions
Trustees and employees engaged in the administration of the pension
fund are covered for losses suffered as a result of wrongful acts,
such as breach of trust, negligence or misrepresentation.
TRP civil fines and penalties
Trustees, employees and sponsoring employers are covered for civil
fines and penalties imposed by The Pensions Regulator and for legal
costs incurred in connection with TPR investigations and
prosecutions.
Ombudsman complaints
Trustees, employees and sponsoring employers are covered for awards
made by the Pensions Ombudsman and for legal costs incurred in
defending determinations and appealing his decisions.
Defence costs
Trustees, employees and sponsoring employers are covered for legal
costs and expenses incurred in defending claims brought against them
in connection with their duties to the Pension Fund. These costs can
include references to alternative dispute resolution and
arbitration, third party costs and investigatory costs.
Employer indemnities
Where the sponsoring employer is required to indemnify a trustee or
employee, the cover reimburses the employer for the indemnity, thus
offering valuable balance sheet protection.
Exonerated losses
Where persons cannot be held liable for Net Loss caused to the
pension fund by wrongful acts as a result of being excused by
exoneration clauses in the trust deed, the policy can nevertheless
reimburse the loss to the pension fund under its Net Loss cover.
Court Application Costs
Sometimes issues arise where the trustees are advised to seek
directions or a declaration from the court as to future conduct of
matters or the interpretation of trust documents.
Normally several interests have to be represented by separate
lawyers and all parties costs have to be met out of the pension
fund. Optional cover is available to reimburse costs ordered to be
paid out of the pension fund in such circumstances.
Retirement cover
During a pension fund’s membership of OPDU, all retired trustees and
administrators are insured. If a pension fund leaves
membership, retired trustees and retired named administrators
automatically qualify for personal insurance cover for up to 12
years from their date of retirement. This provides individuals with
valuable peace of mind in their retirement when they no longer have
any say in whether their pension fund should purchase insurance
cover.
Services
The Advisory Service
Provides trustees and administrators with general guidance and
advice on matters affecting the day-to-day administration of the
pension fund. It aims to facilitate good governance. The
confidential advice line is staffed by lawyers and provides access
to The Advisory Panel Experts where appropriate.
The Advisory Service is complementary to the services provided by
members’ existing professional advisers.
The Claims Service
Provides the best possible claims handling service through a team of
in-house barristers who deal with claims in a sympathetic and
professional manner under claims authority from the insurer. They
are experienced in managing complex, sensitive disputes with due
regard to the adverse publicity that litigation can attract.
Other facilities
OPDU can provide access to a number of other insurance facilities,
for example: winding-up insurance; crime and fidelity insurance;
cover for trustees following mergers and protection against costs
risks inherent in pursuing claims for damages against third parties
such as fund managers and other service providers. If you have novel
insurance requirements, we can work with you to seek to develop a
policy to meet your needs.
For further information
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