What is a Retention Trust?
- retention amounts withheld in the form of cash under particular contracts;
- amounts deposited into the Retention Trust Account as required under BIF2.
There is little difference between a Retention Trust over retention held under a head contract (i.e. over the head contractor’s retention) and a Retention Trust over retention held under a first-tier subcontract (i.e. over the first-tier subcontractor’s retention) or a lower tier subcontract (i.e. over the lower tier subcontractor’s retention). However, to assist understanding, we have set out the differences between Retention Trusts at different levels of the contractual chain.
Beneficiaries: Principal and Head Contractors
Multiple head contracts
Trustee: Head Contractor
Beneficiaries: Head Contractor and First-Tier Subcontractors
Multiple first-tier subcontracts
Beneficiaries: Subcontractors and Lower Tier Subcontractors
Multiple lower tier subcontracts
Last updated: 1 January 2022