Being a Trustee

Role and responsibilities

The work of a Trustee of the Telefónica UK Pension Plan is of great importance. Millions of people in the UK are receiving pensions from such schemes and many millions more have growing entitlements which will be payable in the future.

Picture in your mind’s eye being a Trustee of the Telefónica UK Pension Plan (“the Plan”) …

The beneficiaries of the Plan look to you and your fellow Trustees to make sure that the Plan is run honestly and well. You need not find this situation daunting, because expert help and advice is available to you on the technical matters involved. You will, however, need to grasp basic principles because the ultimate responsibility for the Plan lies with the Trustees.

As a Trustee of the Telefónica UK Pension Plan, your duties would be summarised as follows:

• To act in accordance with the Plan rules and the framework of the law.
• To act prudently, conscientiously and honestly and with the utmost good faith.
• To act in the best interest of the beneficiaries and strike a fair balance between the interests of different classes of beneficiaries.
• To take advice on technical matters and any other matters which you do not understand.
• To invest the assets of the trust.

As far as possible, the Trustees must put aside their personal views on the ethical or political aspects of a particular issue. Furthermore, the Trustees are not a representative of a particular group or interest from which they are drawn. The Trustees' duty is to serve all the different classes of beneficiaries impartially. Nor, by the same token, are the Trustees negotiators, particularly between members of the Plan and the Company.

Liability

If a Trustee carries out some act in relation to the trust which is not authorised by the terms of the trust or the law, of if he or she fails to do something which should have been done under the same provisions, then this is called a breach of trust. If it causes a loss to the Plan, the Trustee is personally liable for the loss. However, the Plan contains a provision exempting Trustees from personal liability provided that the Trustee has acted honestly and prudently.

Regular meetings

At least four Trustee Meetings are held each year, each lasting a whole working day, and there is an expectation that you will attend each meeting along with any subcommittee meetings that might reasonably be arranged.

You will be allowed paid time off to undertake your Trustee duties, and you will be required to attend an initial training course – called a Trustee Briefing Session. This will be a one day course and then further training will take place regularly.

Sample Trustee Agenda

1. Introduction
2. Minutes of the previous meeting – Ensuring that the minutes are a true reflection of what was said. Minutes have been used in court cases and cases with the Pensions Ombudsman, so it is crucial that they are clear and correct.
3. Plan administration review – The administration of the Plan is crucial. The administration is done by a third party specialist company but the Trustees must ensure that it is working properly; did contributions get collected and invested in time? Did benefits get paid? Are there trends in the behaviour of the members that the Trustees can react to?
4. Benefit payment – From time to time members of the Pension Plan die and the Trustees need to decide how to distribute benefits.
5. Investment review – With more than £600m under investment the Trustees spend a lot of time ensuring that the investments are appropriate and the investment managers are performing properly. This involves meeting with the investment managers regularly and understanding their approach and performance.
6. Discussion with the Plan actuary – The Plan actuary is one of the Trustees’ specialist advisors. He regularly updates the Trustees on whether there are sufficient funds held in the Plan to pay benefits. The actuary assists the Trustees when they agree the contribution rate with the Company.
7. Communications update – Making sure the Plan is well run can be an internal facing activity but the Trustees are responsible for promoting the Plan to make sure it is well understood and appreciated.

Trustee election pages

• Being a Trustee
• The Telefónica Trustee Board
• The election process
• Timetable
• Election results