Which document is typically used to specify how pension rights are held on behalf of beneficiaries in a pension arrangement?

• A. Schedule of Benefits
• B. Declaration of Trust
• C. Letter of Exchange
• D. Memorandum of Understanding

Answer: (B)

The main idea here is that pension rights are typically held in a trust, with a formal document that sets out who owns the rights and how the assets are managed on behalf of beneficiaries. The Declaration of Trust is that document: it states that the scheme assets are held by trustees for the benefit of the members and other beneficiaries, and it defines who is entitled to what and under what conditions. This creates a clear legal structure showing the separation of ownership (trustees holding for beneficiaries) from the employer and administrators, and it guides how benefits are paid and how the fund is administered. In contrast, a Schedule of Benefits simply lists the benefits available, not who holds the rights; a Letter of Exchange and a Memorandum of Understanding relate to different types of arrangements and do not establish the trust-like holding of pension rights.