We explore how employers can ensure their trust deed is up-to-date, speeding up benefit payment in the event of a claim.
It’s important to be prepared at claim stage in order to speed up the process and ensure beneficiaries are paid quickly. At Ellipse, we pay 99% of claims within five working days of receiving all the information we need, but sometimes delays are caused by employers who are not prepared. Missing trust deeds, no active trustees and no bank account details all cause delays.
Giving your trust arrangements an MOT every few years is a sensible precaution to make sure you are prepared should a death occur.
Is your scheme in the Master Trust or do you have your own trust?
This is the first thing to check. There are two ways to establish a trust for a registered group life scheme, either by setting up your own trust and registering it with HMRC or by joining our Master Trust.
You can check how your trust has been set up by taking a look at your Ellipse policy schedule. If the Pension Scheme Tax Reference (PSTR) is 00771706RV, you are in our Master Trust. If it is any other reference, you have your own trust. (A PSTR has 10 characters made up of eight numbers followed by two letters).
Your scheme is in the Master Trust
As you have opted into the Ellipse Master Trust, the complexities of having your own trust are removed and no MOT is needed.
In the event of a claim you will need to download a claim form from our website, complete it and send it to us with any nomination of beneficiary forms you hold for the employee. If you have used our online nomination of beneficiary service and your employee has uploaded their expression of wish, we will forward this on to Pitmans Trustees Limited (the trustees for our Master Trust) when we have received your claim form and all relevant information. In most cases we won’t need the death certificate as we will check the online death register.
We will then pay the claim to PTL who will begin their investigation to determine the most appropriate beneficiaries. Generally they will be guided by the latest nomination of beneficiary form, but will be subject to the trust rules and therefore the trustees have final discretion over who the payment is paid to. Once decided, they will then pay the benefit direct to the beneficiaries.
You have your own trust
If you’ve made your own arrangements, it’s important to make sure they are in order. You need to know where your trust deed is, who the trustees are and if there is a trustee bank account set up.
Where is your trust deed?
It’s important to make sure your trust deed is stored in a safe place. This is because the scheme rules included in the deed will set out how the trustees should act in the event of a claim.
Ellipse will not have a copy of your trust deed as we do not ask for this when your policy starts. We will only ask for the trust’s Pension Scheme Tax Reference (PSTR), the unique reference given to you by HMRC when your scheme is registered. It is important to keep the trust deed safe from the moment your trust is setup and registered with HMRC.
Who are your trustees?
Trustees are responsible for deciding who the benefit is paid to. Although an employee may have completed a nomination of beneficiary form, the trustees must investigate to determine who the most appropriate beneficiaries are at the time of the death. The trustee rules will specify who can be a beneficiary.
Trustees are appointed when a trust is established and you need to know who these people are in the event of a claim. If you are not sure (this may happen when the trust was set up some time ago, the company has been taken over or relevant trustees have moved on), you’ll need to check your trust deed.
The trust deed will also set out the scheme rules which outline who can appoint and remove a trustee. It’s important to know who this is as new trustees may need to be appointed if the original ones are no longer suitable – perhaps they were directors of the company and have since left.
Who is your scheme administrator?
The scheme administrator is appointed at the time of establishing the trust and is the person who would have registered your scheme with HMRC. The scheme administrator is responsible for many things including the pension scheme’s annual reporting to HMRC and reporting the amount of each claim that passes through the trust.
It’s important to know who this is, as if an employee’s benefit exceeds the Lifetime Allowance (LTA), this will need to be reported through the scheme administrator to the employee’s legal personal representative. Also, if the employee’s benefit is in excess of 50% of the Lifetime Allowance, the scheme administrator will have to produce an event report to meet HMRC requirements.
If you do not know who the scheme administrator is you should contact HMRC with your PSTR number and they should be able to tell you.
Do you have a trustee bank account?
Claim payments are made from Ellipse to the trustee’s bank account. If you do not have a bank account, and where the scheme is a standalone registered group life scheme (not linked to retirement benefits), Ellipse can pay the sponsoring company or the beneficiary directly, but we will require the trustees to sign an additional declaration to formally instruct us. We may also ask to see the trust deed which again highlights the importance of making sure this is easily accessible.
Would you rather be in the Master Trust?
If so, you can switch to the Master Trust at any time and at no extra cost. There is less maintenance and no need to periodically review the arrangements. It’s easier at claim stage too as our professional trustees, Pitmans Trustees Limited, handle these responsibilities and make payments directly.
You will need to terminate your existing registered group life trust before joining the Master Trust, so check your trust deed to see how to do this. Further information on how to terminate an existing trust is in Appendix 1 of our Master Trust FAQs.
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