Many pension schemes operate through a trust. A trust is a legal mechanism whereby certain individuals, known as trustees, are given property on the understanding that they will hold, invest and dispose of that property in the interests of those who are intended to benefit under the trust - the 'beneficiaries'. In the case of a pension scheme, the employer gives money to the trustees of the pension scheme and the trustees are then under a duty to administer those funds in the interests of the scheme's members, that is, the employees, deferred members, and pensioners.
A trust is set up by a trust deed, which sets out the powers that the trustees have and the broad framework within which they must operate. In the case of a pension scheme, for example, the trust deed is likely to contain a power for the trustees to amend the scheme and to wind up the scheme. The trust deed is accompanied by rules that set out who is eligible for benefits under the scheme and how benefits are calculated.
Pension schemes that are not set up under a trust are established by some other form of agreement or arrangement, but will have similar rules on eligibility and benefits. They are operated by scheme managers rather than trustees.