Eversheds Sutherland (International) LLP
4 Contributions by Eversheds Sutherland (International) LLP
PRACTICE NOTES
THIS PRACTICE NOTE APPLIES ONLY TO DEFINED BENEFIT AND HYBRID OCCUPATIONAL PENSION SCHEMES
Purpose of admissible rules
During an assessment period, trustees must run the scheme and provide benefits to members in line with the scheme’s admissible rules, as defined in paragraph 35(2) of Schedule 7 to the Pensions Act 2004 (PeA 2004). The Pension Protection Fund (PPF) issued guidance for trustees on applying those admissible rules during the assessment period, with examples, in the Appendix to the Financial Management section of its Detailed Trustee Guidance. This material was archived when the PPF changed its website in December 2018, but it remains helpful for understanding what counts as an admissible payment. At the end of the assessment period, if the PPF takes responsibility for the scheme and the scheme enters the PPF, the PPF will provide compensation to members and their
Pensions
PRACTICE NOTES
This practice note applies only to defined benefit and hybrid occupational pension schemes
Determining normal pension age under the scheme’s admissible rules
Members’ normal pension age under the scheme’s admissible rules must be clearly and accurately identified so that:
an eligible scheme can supply the Pension Protection Fund (PPF) with an actuarial valuation of the scheme’s assets and protected liabilities at prescribed, set intervals, for the purpose of enabling the PPF to compute risk‑based pension protection levies
where the scheme is within an assessment period, the PPF can secure an actuarial valuation of the scheme’s assets and protected liabilities as at the relevant time as required
the PPF can determine the date from which compensation will be payable to an individual (and the amount of that compensation) under the pension compensation provisions of the Pensions Act 2004, s 162 and Sch 7 (PeA 2004)
For more on
Pensions
PRACTICE NOTES
THIS PRACTICE NOTE APPLIES ONLY TO DEFINED BENEFIT AND HYBRID OCCUPATIONAL PENSION SCHEMES
Typically, a scheme’s route into the PPF starts when the sponsoring employer of an eligible arrangement experiences a qualifying insolvency event. For a scheme to enter the PPF, its sponsoring employer must satisfy the statutory meaning of ‘employer’ for that purpose.
Who counts as the ‘employer’ differs according to whether:
the scheme is a single-employer scheme, or is/has been a multi-employer scheme
the scheme has active members on the date of the qualifying insolvency event
Definition of employer under section 318 of the Pensions Act 2004
Under section 318 of the Pensions Act 2004 (PeA 2004), an employer, in relation to an occupational pension scheme, is the employer of ‘persons in the description of employment to which the scheme in question relates’ (the ‘relevant
Pensions
PRACTICE NOTES
THIS PRACTICE NOTE APPLIES ONLY TO DEFINED BENEFIT AND HYBRID OCCUPATIONAL PENSION SCHEMES
What is a 'sectionalised' pension scheme?
A pension scheme can be set up in several different ways and configurations. For example, it might take the following forms:
include more than one participating employer within the same arrangement and establish distinct benefit designs for members employed by different employers
originate from earlier mergers or bulk transfers of members’ benefits arising out of corporate transactions, leaving a single sponsoring employer but retaining rules under which different groups of members receive different benefits
provide both earlier, historic defined benefits together with more recent defined contribution benefits
operate as an industry-wide arrangement that permits multiple employers to participate, each with its own section delivering benefits to its own employees
The rules of the scheme may then expressly state:
that the scheme’s assets are held and administered as one overall fund and,
Pensions
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