Protecting Pension Trustees When It Matters Most

As organisations look to reduce future pension liabilities by moving away from defined benefit (DB) pension schemes, trustees of pension funds can face significant exposure to claims arising from decisions made during the transition and wind-up period. Without the right cover in place, those trustees can be left vulnerable.

AIG UK’s Directors and Officers (D&O) Liability team recently demonstrated how specialist knowledge can make a difference. Working closely with a broker, the team arranged a bespoke Pension Trustee Liability (PTL) run-off solution for a UK-based, leading global technology and services company facing the imminent wind-up of its DB pension scheme.

The result was a new PTL discontinuance policy offering 15 years of tail coverage for the individual trustees involved in managing the scheme, ensuring they have long-term protection. This highlights how AIG works alongside brokers to understand clients’ specific risks and structure differentiated solutions that meet their needs.

Acting in the Best Interests of our Clients

“We worked closely with the broker and client to develop cover that met the requirements of the pension scheme trustees. PTL run-off cover is incredibly technical and requires deep specialist knowledge, which is something our D&O team has a strong track-record of delivering”, said Paul Atherton, Head of Commercial D&O, AIG UK.

“Working alongside our broker partner, we focused on the client’s specific needs and aimed to go beyond expectations at every step.”

Defined Benefit (DB) Pension Scheme Discontinuance 

Many employers have taken steps to reduce long-term pension risk by transferring their DB schemes to annuity insurers through bulk transfer. This is a detailed and often long-protracted process, and while the annuity insurer takes over the running of the scheme and assumes responsibility for all future liabilities, trustee exposure does not end there. Trustees can remain liable for decisions made during the life of the scheme and the wind-up period.

This is where brokers and clients may need guidance. Trustees may require PTL run-off cover to protect against claims arising from any wrongful acts committed during this period. This is a product where AIG UK’s D&O team has significant expertise and a strong record of delivery.

This marketing material is intended for insurance brokers and other insurance professionals for their information. For full terms, conditions and benefits related to AIG products, please refer to the policy and associated documents.

This material is communicated for information purposes only and is not legally binding. This material does not constitute an offer to sell any of the insurance coverage or other products or services described herein. We do not provide legal, credit, tax, accounting or other professional advice, and you and your advisors should perform your own independent review with respect to such matters as they relate to your particular circumstances and reach your own independent conclusions regarding the benefits and risks of any proposed transaction or business relationship. 

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