Trustee training is generally regarded as good governance. Competent trustees make better decisions, ask better questions, understand regulatory obligations more clearly, and are better equipped to protect the interests of members and beneficiaries. In most circumstances, expenditure on trustee education is therefore not only permissible, but desirable.
However, fiduciary duties are intensely contextual. Expenditure that may be entirely proper in one setting may become indefensible in another.
Consider the following scenario.
A board of trustees has formally decided to dissolve its retirement fund and to transfer all members and assets to an umbrella fund within the next few months. Shortly thereafter, one of the trustees becomes aware of a foreign trustee training course aimed at international delegates. The programme is prestigious, but prohibitively expensive. Attendance would require the fund to pay not only substantial course fees, but also international airfares, hotel accommodation, meals and incidental travel expenses. Not to forget the work time spent on the course at the employer’s expense.
Can the board lawfully and prudently approve such expenditure?
The answer lies not in whether trustee training is generally desirable, but whether this particular expenditure can be justified in the specific circumstances through the lens of fiduciary duty.
Fiduciary duties are owed to members, not trustees
Trustees of retirement funds do not administer fund assets for their own benefit. Their duties are fiduciary in nature and require them to act at all times in the best interests of members and beneficiaries.
This includes the duty to:
However, fiduciary duties are intensely contextual. Expenditure that may be entirely proper in one setting may become indefensible in another.
Consider the following scenario.
A board of trustees has formally decided to dissolve its retirement fund and to transfer all members and assets to an umbrella fund within the next few months. Shortly thereafter, one of the trustees becomes aware of a foreign trustee training course aimed at international delegates. The programme is prestigious, but prohibitively expensive. Attendance would require the fund to pay not only substantial course fees, but also international airfares, hotel accommodation, meals and incidental travel expenses. Not to forget the work time spent on the course at the employer’s expense.
Can the board lawfully and prudently approve such expenditure?
The answer lies not in whether trustee training is generally desirable, but whether this particular expenditure can be justified in the specific circumstances through the lens of fiduciary duty.
Fiduciary duties are owed to members, not trustees
Trustees of retirement funds do not administer fund assets for their own benefit. Their duties are fiduciary in nature and require them to act at all times in the best interests of members and beneficiaries.
This includes the duty to:
- act for a proper purpose;
- exercise reasonable care, diligence and skill;
- avoid unnecessary or wasteful expenditure;
- preserve fund assets;
- avoid conflicts between personal interests and fiduciary obligations; and
- ensure that all fund expenditure is reasonable, necessary and proportionate.
These obligations apply at all times, but they become particularly acute when a fund is entering a managed wind-down.
Once a board has resolved to dissolve the fund, its role changes materially. It is no longer stewarding an ongoing institution with a long-term governance horizon. Instead, it becomes the temporary custodian of a finite process whose purpose is the orderly transfer of members, assets and obligations.
That shift fundamentally changes the expenditure analysis.
The question is not whether training is good, but whether this training is justified
The relevant fiduciary question is straightforward:
Would a prudent trustee, acting solely in the interests of members, conclude that this expenditure is necessary and justifiable for the fund’s remaining lifespan?
In most cases, the answer is likely to be no.
Ordinarily, trustee education is an investment in governance capability. The expectation is that the knowledge acquired will improve board decision-making over time and enhance the protection afforded to members.
But if the fund will cease to exist within a few months, the governance horizon has effectively collapsed.
The board is no longer investing in the long-term effectiveness of the fund’s governance structures because those structures are about to disappear.
In those circumstances, expensive training begins to look less like a fund-related governance expense and more like personal professional development funded by members.
That is where fiduciary concerns arise.
Proportionality matters
Trustees are not merely required to act honestly. They must act prudently.
A critical question is whether the anticipated benefit to members is proportionate to the cost.
The board should ask:
Once a board has resolved to dissolve the fund, its role changes materially. It is no longer stewarding an ongoing institution with a long-term governance horizon. Instead, it becomes the temporary custodian of a finite process whose purpose is the orderly transfer of members, assets and obligations.
That shift fundamentally changes the expenditure analysis.
The question is not whether training is good, but whether this training is justified
The relevant fiduciary question is straightforward:
Would a prudent trustee, acting solely in the interests of members, conclude that this expenditure is necessary and justifiable for the fund’s remaining lifespan?
In most cases, the answer is likely to be no.
Ordinarily, trustee education is an investment in governance capability. The expectation is that the knowledge acquired will improve board decision-making over time and enhance the protection afforded to members.
But if the fund will cease to exist within a few months, the governance horizon has effectively collapsed.
The board is no longer investing in the long-term effectiveness of the fund’s governance structures because those structures are about to disappear.
In those circumstances, expensive training begins to look less like a fund-related governance expense and more like personal professional development funded by members.
That is where fiduciary concerns arise.
Proportionality matters
Trustees are not merely required to act honestly. They must act prudently.
A critical question is whether the anticipated benefit to members is proportionate to the cost.
The board should ask:
- What direct benefit will members derive within the remaining three months?
- Will the training materially improve the dissolution or transfer process?
- Is the course specifically focused on fund termination, bulk transfers, or wind-up governance?
- Or is it general trustee development?
If the course is general in nature, the difficulty becomes obvious.
Members would bear a substantial immediate cost while receiving little or no meaningful corresponding benefit before the fund ceases to exist.
That imbalance is difficult to reconcile with prudent stewardship.
Personal benefit and perceived conflicts
The fiduciary problem is not limited to cost.
The trustee would personally receive:
Members would bear a substantial immediate cost while receiving little or no meaningful corresponding benefit before the fund ceases to exist.
That imbalance is difficult to reconcile with prudent stewardship.
Personal benefit and perceived conflicts
The fiduciary problem is not limited to cost.
The trustee would personally receive:
- international travel;
- hotel accommodation;
- meals and hospitality;
- professional prestige; and
- transferable knowledge that remains valuable long after the current fund disappears.
Meanwhile, the benefit to the fund may be minimal.
This does not necessarily imply improper motive. A trustee may genuinely believe the training would be useful.
But fiduciary law is concerned not only with actual conflicts, but also with circumstances where personal benefit may cloud objective judgment or create the appearance that members’ assets are being used for private advantage.
An informed member might reasonably ask:
"Why are my retirement savings funding foreign trustee development for a board that will cease to exist in a matter of weeks?"
That question alone illustrates the governance risk.
Timing is everything
Had the same request arisen in an ongoing fund expected to operate for many years, the analysis might be entirely different.
Long-term governance capability can justify meaningful investment in trustee education.
But timing fundamentally alters the fiduciary equation.
Where dissolution has already been resolved and transfer is imminent, discretionary expenditure must be viewed far more critically.
The board’s immediate priorities should be:
This does not necessarily imply improper motive. A trustee may genuinely believe the training would be useful.
But fiduciary law is concerned not only with actual conflicts, but also with circumstances where personal benefit may cloud objective judgment or create the appearance that members’ assets are being used for private advantage.
An informed member might reasonably ask:
"Why are my retirement savings funding foreign trustee development for a board that will cease to exist in a matter of weeks?"
That question alone illustrates the governance risk.
Timing is everything
Had the same request arisen in an ongoing fund expected to operate for many years, the analysis might be entirely different.
Long-term governance capability can justify meaningful investment in trustee education.
But timing fundamentally alters the fiduciary equation.
Where dissolution has already been resolved and transfer is imminent, discretionary expenditure must be viewed far more critically.
The board’s immediate priorities should be:
- ensuring a legally compliant transfer process;
- accurate actuarial and administrative execution;
- clear communication with members;
- proper settlement of obligations; and
- preserving member value.
This is not the stage for expensive discretionary initiatives unless they are clearly indispensable.
Could the expenditure ever be justified?
Possibly—but only in exceptional circumstances.
For example, if the training is directly and specifically relevant to the imminent transfer process, such as specialised education dealing with fund dissolution, bulk transfers, wind-up governance, or transaction execution, the board may have a stronger justification.
Even then, fiduciary prudence would require further questions:
Could the expenditure ever be justified?
Possibly—but only in exceptional circumstances.
For example, if the training is directly and specifically relevant to the imminent transfer process, such as specialised education dealing with fund dissolution, bulk transfers, wind-up governance, or transaction execution, the board may have a stronger justification.
Even then, fiduciary prudence would require further questions:
- Is overseas attendance genuinely necessary?
- Is a local or virtual alternative available?
- Is the cost proportionate?
- Can the same outcome be achieved more economically?
Fiduciaries are not free to choose the most attractive option if a materially cheaper alternative would serve the same legitimate purpose.
A practical governance test
Before approving expenditure of this nature, a prudent board should ask:
A practical governance test
Before approving expenditure of this nature, a prudent board should ask:
- Is the expenditure necessary?
- Is it directly linked to the fund’s remaining obligations?
- Is the benefit to members clear and demonstrable?
- Is there a less expensive alternative?
- Would members regard the expenditure as reasonable?
- Would the regulator view the decision as prudent?
- Could the board comfortably defend the decision before an auditor, court or tribunal?
If those questions cannot be answered convincingly, approval would be difficult to justify.
Conclusion
Trustee education remains an important pillar of good retirement fund governance. But fiduciary duties require context-sensitive judgment, not mechanical reliance on general principles.
Where a fund has already resolved to dissolve and transfer into an umbrella fund within a short period, approving prohibitively expensive overseas trustee training will, in most circumstances, be difficult to defend.
Absent a compelling and demonstrable connection between the training and the immediate execution of the transfer, such expenditure would likely be viewed as disproportionate, improperly purposive, and inconsistent with prudent stewardship of members’ assets.
The safer fiduciary course is clear: if training is genuinely required, it should be targeted, directly relevant, and cost-effective.
Members’ retirement savings are not a discretionary trustee development budget.
Conclusion
Trustee education remains an important pillar of good retirement fund governance. But fiduciary duties require context-sensitive judgment, not mechanical reliance on general principles.
Where a fund has already resolved to dissolve and transfer into an umbrella fund within a short period, approving prohibitively expensive overseas trustee training will, in most circumstances, be difficult to defend.
Absent a compelling and demonstrable connection between the training and the immediate execution of the transfer, such expenditure would likely be viewed as disproportionate, improperly purposive, and inconsistent with prudent stewardship of members’ assets.
The safer fiduciary course is clear: if training is genuinely required, it should be targeted, directly relevant, and cost-effective.
Members’ retirement savings are not a discretionary trustee development budget.