TRUST-BASED PENSION:
STM’s trust-based pension schemes are legally established by a Master Trust Deed which, together with its accompanying Rules, govern how the whole pension scheme works.
STM is the professional and regulated Trustee company appointed to ensure compliance with the Trust Deed and Rules.
An individual becomes a Member of the pension scheme by “adhering” to the Trust, thereby accepting the terms of the rules and the protections arising therefrom.
CONTRACT-BASED PENSION:
STM’s contract-based pension schemes are legally established by way of a Unilateral Declaration, also with accompanying Rules, which govern how the whole pension scheme works.
STM is the professional and regulated Scheme Administrator which ensures compliance with the Declaration and Rules.
An individual becomes a Member of the pension scheme by “contracting” with the Administrator to gain the retirement benefits and protections of the scheme.
PRACTICAL SIMILARITIES:
STM’s pension schemes, whether trust or contract-based, have very similar application documents and processes, especially for “ROPS”.
There are no practical differences in the contributions/ transfers which can be received, the investments which can be made or the retirement benefits which can be paid.
STM’s charging structure is also identical across trust or contract ROPS.
PRACTICAL DIFFERENCES:
Some countries, including some civil law countries, may not recognise the concept of a trust or there may be uncertainty on how trust-based pensions are treated for tax or reporting purposes.
In such countries, a contract-based pension may be preferred.
Some countries have very strict laws to ensure that Trustees have a “fiduciary duty” to act in the best interests of the scheme members, but they do not have such laws for contract pension providers.
Such differences, for example in the UK, tend to concern employer pension schemes more and in any event are usually mitigated by regulation and the pension itself.
SECURITY:
STM applies the same level of management and control to ALL of their pension schemes, whether trust or contract-based, and ALL within the same regulatory framework.
All pension assets are entirely and legally separated from STM’s assets. These protections are subject to external audit.
Accordingly, there is no difference between that level of security and oversight that applies.
