Trustees and employers could be on the receiving end of defined contribution (DC) scheme members' wrath and be forced to take the blame for bad investment decisions, warns Wedlake Bell.

The City law firm is concerned that disgruntled DC scheme members will look towards those who were appointed to oversee the management and investments of these schemes as the scapegoats in the situation, since the value of pension pots have fallen dramatically over the past year.

"There are many individuals who will be dissatisfied with the performance of their pensions over the past year," said Jan Wolstenholme, a partner at Wedlake Bell. "Some may have underperforming pensions, others might be nearing retirement and so do not have time on their side to wait for an eventual recovery or to rebuild their funds. It is likely that these individuals will look for someone to blame, or seek financial compensation."

However, the firm said it may be possible to establish that trustees and employers are responsible for ensuring that employees are offered suitable pension options. It may also be possible to argue that an employer has responsibility to advise employees against unsuitable decisions if they offer a pension arrangement.

"Although when it comes to DC scheme s individuals make their own decisions in terms where their pension contributions are invested, if their pensions are underperforming, they could start scrutinising what information and warnings were given to them in order to ensure that they made educated choices," Wolstenholme added.

Good scheme governance, however, can minimise the likelihood of successful claims being brought forward, and of employers or trustees being landed with the blame.

- Pensions Age March 2009

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