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20 Contributions by gunnercooke LLP
PRACTICE NOTES
Purpose of participation
Admitting a new employer to an occupational pension scheme is intended to extend the scheme’s benefits to that employer’s relevant employees, ensuring those workers of the new employer can access the benefits provided.
Reason for participation
An employer might choose to participate in a scheme for various reasons. For example:
it has recently been acquired by an employer that already participates in the scheme
following a business reorganisation, employees have transferred to it from another employer that is already in the scheme
it wishes to alter the pension arrangements offered to its staff (for instance, closing a defined benefit scheme to new members and joining another group defined contribution arrangement), or
it must enter a pension scheme for automatic enrolment purposes
Who may participate?
The scheme’s governing documentation determines who can become a participating employer in any particular scheme and will set out the conditions for
Pensions
PRACTICE NOTES
What is a cash balance scheme?
Put simply, a cash balance pension scheme is an arrangement where a member accumulates a guaranteed pot of money during their pensionable service, which is then used to provide retirement benefits. When the member retires, this pot is generally applied to buy an annuity (or to deliver other retirement benefits) on whatever terms can be obtained in the market at that time. This kind of scheme blends features of a defined benefit (DB) arrangement with aspects of a defined contribution (DC) arrangement. That mix is important because it influences how the risks inherent in any pension arrangement are shared between the member and the sponsoring employer, as explored in this Note.
Benefit structures
Cash balance schemes come in different forms, but they broadly fall into two categories depending on how the retirement cash sum is
Pensions
PRACTICE NOTES
Although trustees of defined benefit (DB) schemes are typically not signatories to sale and purchase agreements in corporate deals, they still have a crucial part to play. To properly grasp the implications of any transaction, they must also possess a solid grasp of scheme funding, so they can see the full picture. Their responsibilities include safeguarding members’ accrued promises and, as encouraged by the Pensions Regulator, taking a proactive stance on addressing funding shortfalls—this involves evaluating the employer’s financial robustness (the employer covenant) and, where suitable, seeking improved funding terms from the sponsoring employer. In line with this, the Pensions Regulator requires trustees to maintain up-to-date insight into covenant strength by undertaking routine employer covenant reviews. This regular assessment keeps trustees’ understanding current during corporate activity and supports informed, timely engagement with the sponsoring employer when appropriate. While trustees owe fiduciary duties to act in the
Pensions
PRACTICE NOTES
THIS PRACTICE NOTE APPLIES TO TRUST-BASED DEFINED CONTRIBUTION (DC) OCCUPATIONAL PENSION SCHEMES
Statutory right to cash equivalent
In the same way as defined benefit (DB) occupational pension schemes, members of defined contribution (DC) occupational pension schemes have a legal entitlement to transfer the cash equivalent of their benefits to another pension arrangement. This entitlement is primarily set out in sections 93–101 of the Pension Schemes Act 1993 (PSA 1993). The Occupational Pension Schemes (Transfer Values) Regulations 1996, SI 1996/1847 (the Transfer Regulations) provide further detail, including the rules for working out a member’s cash equivalent. Together, these instruments govern the transfer process and calculation mechanics in DC schemes.
Overriding nature of statutory right to transfer
This entitlement is an overriding statutory right (subject to the statutory conditions below). It expressly prevails over any provision in a scheme’s trust deed and rules where those provisions conflict with that right. Some DC
Pensions
PRACTICE NOTES
Practice Note
In this Practice Note, any mention of the National Employment Savings Trust (NEST) Order refers to the National Employment Savings Trust Order 2010, SI 2010/917, in force from 25 May 2018. Citations to the NEST Rules mean the Rules of the National Employment Savings Trust effective from 5 August 2024. NEST is a trust-based, low-cost occupational pension arrangement, created within the government’s workplace pension reforms so that any employer can satisfy new obligations under the auto-enrolment framework. Its intended audience is UK workers new to pensions who previously lacked access to a high-quality, low-cost workplace scheme. NEST meets the definition of a ‘Master Trust scheme’ in sections 1–2 of the Pension Schemes Act 2017. Accordingly, from 1 October 2018 it has been subject to the authorisation and supervision regime for Master Trust schemes. It was therefore obliged to seek master trust
Pensions
PRACTICE NOTES
NEST Order and NEST Rules
In this Practice Note, any mention of the National Employment Savings Trust (NEST) Order refers to the National Employment Savings Trust Order 2010, SI 2010/917 (the NEST Order), as in force from 25 May 2018. References to the NEST Rules mean the Rules of the National Employment Savings Trust effective from 5 August 2024. NEST is a low-charge, defined contribution occupational pension arrangement created as part of the government’s workplace pension reforms. Those reforms introduced a suite of employer obligations (the ‘employer duties’), including a requirement to place eligible jobholders automatically into a pension scheme that satisfies prescribed standards (an ‘automatic enrolment scheme’). NEST was designed to guarantee that every employer could access a low-charge vehicle to help them discharge these new duties. NEST has continued to grow strongly, with membership rising from 12 million to 13 million between March 2023 and
Pensions
PRACTICE NOTES
An indemnity is a contractual responsibility resting on one of the contracting parties (the indemnifier) and owed to the other contracting party (the indemnified party), that responsibility being for the indemnifier to pay, or otherwise recompense, the indemnified party in respect of specified liabilities incurred or assumed by the indemnified party (such liabilities commonly arising after the contract is signed)...
Pensions
PRACTICE NOTES
An indemnity is a contractual duty resting on one contracting party (the indemnifier) and owed to another contracting party (the indemnified party), obliging the indemnifier to pay or otherwise make good the indemnified party’s specified liabilities, whether incurred or assumed by the indemnified party, such liabilities commonly arising only after the contract has been signed by the parties to it...
Pensions
PRACTICE NOTES
FORTHCOMING CHANGE :
The Department for Work and Pensions (DWP) is preparing to introduce a secondary notifiable events regime under section 69A of the Pensions Act 2004, which was inserted by the Pension Schemes Act 2021. Under this new framework, employers will be required to notify both the trustees and the Pensions Regulator of certain defined benefit (DB) scheme events, and to provide an ‘accompanying statement’ (a declaration of intent) setting out the details and the mitigation steps for any potential detriment to the scheme.
In a 2021 DWP consultation it was proposed that three events should trigger notification:
(i) an intended disposal by the employer of a material part of the employer’s business or assets;
(ii) the intended granting or extension of security over assets that would give priority to other creditors—a decision in principle by the employer to grant or extend
Pensions
PRACTICE NOTES
Automatic enrolment duties
The auto-enrolment framework, created under Part 1 of the Pensions Act 2008 (PenA 2008), places three principal enrolment obligations on employers:
automatically enrol every ‘eligible jobholder’ into an ‘automatic enrolment scheme’ (the auto-enrolment duty)
enrol ‘non-eligible jobholders’ into an ‘automatic enrolment scheme’ when they opt in
enrol ‘entitled workers’ who ask to join a scheme into a registered pension scheme
In broad terms, from 2017 the enrolment duties take effect for an employer on the date their first worker starts employment. The minimum quality criteria an automatic enrolment scheme must meet depend on the type of arrangement, for example whether it is a defined benefit (DB) or defined contribution (DC) scheme.
To assist employers in meeting the auto-enrolment duty, the government set up a low-cost pension scheme — the National Employment Savings Trust (NEST) — which was fully compliant. Many employers still use NEST, and the
Pensions
PRECEDENTS
This precedent is produced on the assumption that the drafter acts for the buyer and on the footing that the target company (the Company) is a subsidiary of the Seller. You are strongly encouraged to engage a pensions specialist at the earliest opportunity.
1 Definitions
For the purposes of paragraphs 2 to 9 (inclusive):
Employee means any current or former employee, officer or director of the Company [ or of any Group Company ] [ and any other person involved in managing the affairs of the Company ];
Pension Scheme[s] means [ [ name(s) of scheme(s) ] OR an arrangement or practice for the payment of, or contribution towards, an annuity, pension, lump sum, gratuity or similar benefit to be provided on retirement, ill-health, death or change in service status, or pursuant to a pension sharing order, in relation to the service or
Pensions
PRECEDENTS
This precedent has been produced on the basis that the drafter is acting for the buyer. The following warranties have been prepared for a transaction where:
The Buyer will provide pension benefits through its own arrangement or via an appointed provider; and
Employees’ past service benefits will not be transferred to the Buyer’s arrangement.
You are strongly advised to involve a pensions specialist at the earliest opportunity.
1 Definitions
For the purposes of paragraphs 2 to 7 inclusive:
Employee means [ [specify as necessary, either by category or by named individuals ]; Pension Scheme [ s ] mean [ s ] [ [ name(s) of scheme(s) ] OR an arrangement or practice for the payment of, or contribution towards, an annuity, pension, lump sum, gratuity or similar benefit to be given on retirement, long-term ill-health or death, or pursuant to a pension sharing order, in relation to the service or
Pensions
PRECEDENTS
This Deed is entered into on the [ insert day ] day of [ insert month ] 20[ insert year ]
Parties
[ Insert full company name ], incorporated in England and Wales with company number [ insert number ], and whose registered office is at [ insert registered company address ] (the Departing Employer);
[ Insert full company name ], incorporated in England and Wales with company number [ insert number ], and whose registered office is at [ insert registered company address ] (the Receiving Employer); and
[ [ Insert full name of company ] incorporated in England and Wales with company number [ insert number ] and having its registered office at [ insert registered company address ] OR [ insert individual name(s) ] of [ insert individual address(es) ] ] (the
Pensions
PRECEDENTS
Date: [ insert date ]
(1) [ Name of Principal Company ]
(2) [ Names of Trustees ]
(3) [ Name of New Employer ]
Deed of Participation relating to [ Name of Scheme ]
This Deed is executed the [ insert day ] day of [ insert month ] 20[ insert year ].
Parties
[ insert full company name ] registered in England and Wales under company number [ insert number ] and with its registered office at [ insert registered company address ] (the “Principal Company”);
[ [ insert full name of company ] registered in England and Wales under company number [ insert number ] and with its registered office at [ insert registered company address ] OR [ insert individual name(s) ] of [ insert individual address(es) ] ] (the “Trustees”);
[ insert full name of the new
Pensions
PRECEDENTS
This Deed is entered into on the [ insert day ] day of [ insert month ] 20 [ insert year ], by and between the parties set out below, namely:
Parties
[ insert full company name ], registered in England and Wales with company number [ insert number ], and having its registered office situated at [ insert registered company address ] (the Receiving Employer);
[ insert full company name ], registered in England and Wales with company number [ insert number ], and having its registered office situated at [ insert registered company address ] (the Principal Employer);
[ insert full name of company ], registered in England and Wales with company number [ insert number ], and having its registered office situated at [ insert registered company address ] OR [ insert individual name(s) ] of [ insert
Pensions
PRECEDENTS
Date: [ insert date ]
(1) [ name of Former Principal Employer ] (2) [ names of Trustees ] (3) [ name of the New Principal Employer ]
Deed of Substitution of principal employer[ and change of scheme name] relating to [ name of the scheme ]
This deed is entered into on the [ insert day ] day of [ insert month ] 20[ insert year ].
Parties
[ insert name of retiring employer ], incorporated in England and Wales under company number [ insert company number ], with its registered office at [ insert registered company address ] (the Former Principal Employer);
[ [ insert full name of company ] incorporated in England and Wales under company number [ insert company number ] and whose registered office is at [ insert registered company address ] OR [ insert individual name(s) ] of [ insert
Pensions
PRECEDENTS
This precedent has been produced on the footing that the drafter is acting for the buyer. It proceeds on the understanding that the target company (the Company) is a subsidiary of the Seller. It is strongly recommended that a pensions specialist is engaged at the earliest opportunity.
1 Definitions
For the purposes of paragraphs 2 to 7 (inclusive):
Employee denotes any current or former employee, officer, or director of the Company [ or of any Group Company ] [ as well as any other individual involved in the management of the affairs of the Company ];
Pension Scheme refers to any arrangement or practice for the payment of, or contribution towards, an annuity, pension, lump sum, gratuity, or comparable benefit to be provided on retirement, ill-health, death, or change in service status, or under a pension sharing order, in relation to the service or historic service of an
Pensions
PRECEDENTS
This precedent is prepared on the assumption that the drafter acts for the seller. It also proceeds on the basis that the target company (the Company) is a subsidiary of the Seller. You are firmly encouraged to bring in a pensions specialist at the earliest opportunity.
1 Definitions
For the purposes of paragraphs 2 to 11 (inclusive):
Employee means any current or former employee, officer or director of the Company [ or of any Group Company ] [ and any other person participating in the management of the Company’s affairs ] ;
Pension Scheme [ s ] mean [ s ] [ [ name(s) of scheme(s) ] OR an arrangement or practice for the payment of, or contribution towards, an annuity, pension, lump sum, gratuity or comparable benefit to be provided on retirement, long-term ill-health or death, or pursuant to a pension sharing order, in
Pensions
PRECEDENTS
This template has been prepared on the basis that the writer is acting for the buyer, and that the target company (the Company) is a subsidiary of the Seller. It is strongly recommended that a pensions expert is engaged at the earliest opportunity.
1 Definitions
For purposes of paragraphs 2 to 9 inclusive, the following apply:
Employee means any present or former employee, officer, or director of the Company [ or of any Group Company ] [ and includes any other person participating in the management of the Company’s affairs ] ;
Pension Scheme [ s ] mean [ s ] [ [ name(s) of scheme(s) ] OR an arrangement or practice for the payment of, or for contributing towards, an annuity, pension, lump sum, gratuity, or a similar benefit to be provided upon retirement, ill-health, death, or a change in service status, or in
Pensions
PRECEDENTS
This precedent is prepared on the footing that the drafter acts for the Seller. It is prepared on the basis that the target company (the Company) is a subsidiary of the Seller.
It is strongly recommended that a pensions specialist is engaged at the earliest opportunity.
1 Definitions
For the purposes of paragraphs 2 to 12 (inclusive), the following definitions set out below shall apply:
Employee means any current or former employee, officer, or director of the Company [ or of any Group Company ] [ and any other individual involved in the management of the Company’s affairs ] ;
Pension Scheme means any arrangement or practice providing for, or contributing towards, an annuity, pension, lump sum, gratuity, or similar benefit on retirement, long-term ill-health, or death, or pursuant to a pension sharing order, arising from the service or historic service of an
Pensions
99 Contributions by gunnercooke LLP Experts
PRACTICE NOTES
While pension scheme incentive exercises enable employers to control and reduce liabilities within defined benefit (DB) arrangements, they can also pose risks to the interests of beneficiaries. Their legitimacy has been queried by The Pensions Regulator and by scheme trustees.
Regulatory framework
A code of good practice on incentive exercises (the Code) was produced by the pensions community’s Industry Working Group. Although voluntary, the Code indicates that where advisers are uneasy about conducting an incentive exercise, such concerns ought to be notified to The Pensions Regulator. The Code first appeared in June 2012, was refreshed in February 2016 (with the updated version applying to member offers made thereafter), and was accompanied by a suite of boundary examples. In November 2019, stewardship of the Code was, in effect, transferred to The Pensions Regulator, though it is uncertain whether the Regulator will continue to maintain it. For more
Pensions
PRACTICE NOTES
Introduction
The Waste (England and Wales) Regulations 2011, SI 2011/988 (Waste E&W Regs 2011), represents a significant waste law, although not the only one. It brought many of the requirements of the Waste Framework Directive 2008/98/EC, as amended (WFD 2008), into domestic legislation within England and Wales...
Environment
PRACTICE NOTES
THIS PRACTICE NOTE APPLIES TO REGISTERED OCCUPATIONAL PENSION SCHEMES
As a broad principle, and subject to the governing provisions contained in their trust deed and rules, registered occupational pension schemes may invest without limits on the nature of those investments. Nevertheless, practical departures from this broad principle do exist in practice. The most significant qualifications are the constraints set out in section 40 of the Pensions Act 1995 (PA 1995) and the Occupational Pension Schemes Act (Investment) Regulations 2005, SI 2005/3378 (the Investment Regulations), which significantly curb trustees’ scope to place scheme funds in employer-related investments.
These limits, which this Practice Note addresses, are intended to give clear statutory support to the general tenet that scheme assets should be kept strictly separate from the employer’s property so as to provide greater security for members. The Pensions Regulator has produced guidance concerning the limits
Pensions
PRACTICE NOTES
Waste—regulatory framework
The Waste (England and Wales) Regulations 2011, SI 2011/988, brought the obligations of the Waste Framework Directive 2008/98/EC (WFD) into domestic law in England and Wales. Earlier Directives were implemented through a range of Acts and Regulations, including, among others:
Environmental Protection Act 1990, in particular s 34, which addresses the ‘duty of care’ imposed on those responsible for waste
Control of Pollution (Amendment) Act 1989 and the Controlled Waste (Registration of Carriers and Seizure of Vehicles) Regulations 1991, SI 1991/1624, covering registration arrangements for waste carriers
Environmental Permitting (England and Wales) Regulations 2016, SI 2016/1154, addressing the permitting of waste disposal and recovery operations and related activities
Hazardous Waste (England and Wales) Regulations 2005, SI 2005/894; Hazardous Waste (Wales) Regulations 2005, SI 2005/1806 (W.138); and Hazardous Waste (England and Wales) (Amendment) Regulations 2016, SI 2016/336, also governing hazardous waste
Town and Country Planning Act 1990 and the
Environment
PRACTICE NOTES
THIS PRACTICE NOTE RELATES TO REGISTERED PENSION SCHEMES
Enhanced protection was among the initial two protections available to pension savers on A‑day (6 April 2006), when the registered pension scheme framework and the lifetime allowance concept were first brought in by the Finance Act 2004 (FA 2004). The second protection launched on A‑day was primary protection. In contrast to primary protection, anyone could apply for enhanced protection irrespective of the amount of their pension rights as at 5 April 2006. The purpose behind enhanced protection was to deliver transitional cover for individuals who, before A‑day, had already accrued pension savings that might otherwise have been negatively impacted by the advent of the lifetime allowance (which on A‑day stood at £1.5m). Although the lifetime allowance was removed with effect from 6 April 2024, enhanced protection still affords limited transitional safeguards in relation to an
Pensions
PRACTICE NOTES
Development of the doctrine of estoppel
Estoppel is the commonly used label for the equitable doctrine which holds that where one individual (A) causes another (B), whether through words or conduct and whether explicitly or by implication, to accept a particular state of affairs as true, A ought not later to resile from the representations or acts that induced B to that belief, where it would be unjust or unconscionable for A to do so. Put shortly, where A has by statement or deed led B to that belief, A should not later contradict it if doing so would be unconscionable. Over time, the doctrine has expanded beyond its initial confines, and today the courts (both in England and Wales and elsewhere) recognise and apply a range of distinct forms of estoppel to meet the needs of particular cases...
Pensions
PRACTICE NOTES
This Practice Note applies solely to documents governed by the law of England and Wales. Its main focus is trust-based occupational pension schemes. A document is only enforceable by a court if it has been executed validly. It is therefore essential to follow the correct execution formalities. In pensions practice, the relevant paperwork will typically comprise trust deeds (contracts under seal) and various other forms of written agreements. While oral (ie non-written) agreements are uncommon in the pensions context, as a matter of principle they can be effective unless legislation mandates writing (for example, a contract for the sale of land under section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 (LP(MP)A 1989)). This should be kept in mind when examining, or seeking to manage, any specific pension scheme...
Execution formalities for deeds
Deeds concerning the trusts of
Pensions
PRACTICE NOTES
Executive retirement benefit provision
In much the same way as senior staff typically command higher pay than the wider workforce, they often also receive more generous pension support from their employers. Executive retirement benefits can be structured in several ways, such as:
dedicated ‘executive’ tiers within group-wide occupational pension schemes offering richer terms than the main section
executive-only registered occupational pension schemes
trust-based, unregistered ‘top-up’ pension arrangements
unfunded contractual pension promises
Before A-day (6 April 2006), when the current registered pension scheme tax rules took effect, executive benefits exceeding the then applicable limits under the tax-approved pensions regime were commonly delivered through either:
funded unapproved retirement benefit schemes (FURBS), or
unfunded unapproved retirement benefit schemes (UURBS)
Both FURBS and UURBS conferred certain tax advantages and were used effectively to top up executives’ existing occupational pension schemes. Since A-day, FURBS and UURBS are
Pensions
PRACTICE NOTES
Reducing the financial burden of defined benefit schemes on employers
In recent years, a growing number of employers have sought to avoid or curb their exposure to the increasing costs of defined benefit pension schemes and the risks inherent in running them. To achieve this, many have either restricted entry to their defined benefit scheme—so that no new members are admitted—or, in more severe instances, closed the scheme to the future build-up of benefits. Alternatively, employers may look to amend the scheme’s operating provisions so that benefits accrue on a less generous footing. Each approach aims to limit costs and the scheme risks. One approach is to redesign the scheme so members cease to accrue benefits on a 'final salary' basis (i.e. by reference to pay at, or close to, the date their pensionable service ends) and instead on a 'career average' basis (i.e. by
Pensions
PRACTICE NOTES
THIS PRACTICE NOTE RELATES TO REGISTERED PENSION SCHEMES
Through Schedule 22 of the Finance Act 2013 (FA 2013), the government brought in and implemented an allowance protection framework to accompany and facilitate the reduction in the lifetime allowance from £1.5m to £1.25m on 6 April 2014. This framework, called fixed protection 2014 (FP 2014), builds on the fixed protection regime first launched on 6 April 2012 (referred to as fixed protection 2012, or simply ‘fixed protection’). FP 2014 is the focus of this Practice Note. The initial, stated purpose of FP 2014 was to provide transitional protection for individuals who, before 6 April 2014, had already accumulated pension savings exceeding £1.25m, or who intended to do so on the assumption that the lifetime allowance would stay at least at £1.5m. Although the lifetime allowance was subsequently abolished with effect from 6 April 2024, FP 2014 still
Pensions
PRACTICE NOTES
THIS PRACTICE NOTE RELATES TO REGISTERED PENSION SCHEMES
By means of Schedule 4 to the Finance Act 2016 (FA 2016), the government brought in an allowance protection regime designed to sit alongside the cut in the lifetime allowance from £1.25m to £1m on 6 April 2016. Termed fixed protection 2016 (FP 2016), it mirrors earlier fixed protection regimes respectively launched on 6 April 2012 (fixed protection 2012, or simply ‘fixed protection’) and 6 April 2014 (fixed protection 2014). This Practice Note focuses on FP 2016, which is the subject of this Practice Note. The original purpose of FP 2016 was to give transitional protection to people who, before 6 April 2014, had already accumulated pension savings above £1m, or who expected to do so on the basis that the lifetime allowance would be maintained at no less than £1.25m. Although the lifetime
Pensions
PRACTICE NOTES
This practice note chiefly concerns registered occupational pension schemes
One outcome of recent pensions legislation reforms, including the introduction of anti‑age discrimination legislation (for further information, see Practice Note: Age discrimination for pension lawyers), has been to permit a new and wider flexibility in how members of registered pension schemes can accrue benefits and ultimately receive them from such arrangements. In particular, the past few years have witnessed the rise of the concept of ‘flexible retirement’ as a recognised approach.
Concept of flexible retirement
Broadly, flexible retirement captures the ability of members to:
begin taking benefits from registered pension schemes whilst remaining in active service with the sponsoring employer of their pension arrangements; and
continue to build up benefits, if they so choose, after normal pension date (typically age 65) and in ways that comply with the age discrimination
Pensions
PRACTICE NOTES
This practice note applies to defined benefit occupational pension schemes
The importance of identifying a scheme’s statutory employer(s)
A fundamental element of the law governing occupational pension schemes, particularly defined benefit (DB) schemes, is that the main burden of supporting the scheme lies with its sponsoring employers, as a matter of law alone indeed.
An employer might have exited the scheme previously without settling all liabilities owed to it; in such circumstances they may still be a ‘statutory employer’ even though they no longer participate. They may therefore continue to bear obligations in relation to the scheme.
Under the registered pension scheme regime, various specific obligations fall upon those who qualify as ‘statutory employers’, a notion carried over from the earlier tax-exempt approval regime in force before A-day (for further information on the pre A-day regime, see The pre A-day pensions tax regime
Pensions
PRACTICE NOTES
THIS PRACTICE NOTE APPLIES TO REGISTERED OCCUPATIONAL PENSION SCHEMES
The scheme rules
Within trust-based occupational pension schemes, provisions for ill-health early retirement usually place decision-making responsibility with the trustees, the sponsoring employer, or both acting together. The precise role can differ from scheme to scheme, and the language used may require careful interpretation to apply correctly.
In some schemes, the role is confined to determining whether the ill-health test set out in the rules is met.
In others, there is a discretionary element in deciding whether to grant an ill-health pension to a member.
Because definitions and scope vary, uncertainties may arise when construing these provisions. For further information, see Practice Note: Ill-health early retirement—Interpreting the scheme rules. The identified decision maker must evaluate every application on a case-by-case basis, taking into account the specific facts presented.
The ill-health rule
On receipt of an
Pensions
PRACTICE NOTES
THIS PRACTICE NOTE RELATES TO REGISTERED OCCUPATIONAL PENSION SCHEMES
A key feature of registered occupational pension schemes is their capacity to offer ill-health (often referred to as 'incapacity') benefits to members. These benefits are particularly significant where members are required to leave employment ahead of their normal pension date (NPD) as a result of serious illness...
This Practice Note considers the range of issues that may arise when construing the rules of a registered occupational pension scheme, including issues of interpretation and application, for the purpose of deciding whether ill-health benefits ought to be awarded to a member. For further detail on the considerations relevant to trustees of occupational pension schemes and/or employers who are required to make decisions in relation to members’ ill-health early retirement requests, see Practice Note: Ill-health early
Pensions
PRACTICE NOTES
FORTHCOMING DEVELOPMENT:
On 15 December 2025, the Department for Work and Pensions (DWP) opened a consultation reviewing whether the powers allowing the Pensions Regulator (TPR) to remove and replace trustees should be enlarged or redesigned. It observes that TPR’s present statutory powers to suspend, bar or substitute trustees are narrowly framed, seldom used, and may involve intricate, quasi‑judicial procedures. Where a change of trustees is needed, TPR typically appoints independent trustees from its independent register, which, in reality, comprises a limited pool of professional trustee firms and can be an effective yet expensive outcome, notably for distressed schemes or orphan arrangements with no trustees in post. In this light, the consultation assesses the practicality of creating a government‑appointed public trustee to provide a secure, independent, last‑resort option when trustees must be appointed or replaced. Independent individuals may act for
Pensions
PRACTICE NOTES
FORTHCOMING DEVELOPMENT :
Section 10 of the Finance Act 2022 will lift the normal minimum pension age (NMPA) from 55 to 57 on 6 April 2028, with an exception for members of the firefighters, police and armed forces public service pension schemes.
The Finance Act 2022 will also allow members of registered pension schemes to draw benefits before 57 if, on or before 4 November 2021, they:
had an unqualified right to take benefits; or
were engaged in a substantive transfer to a scheme offering an unqualified right to a protected pension age under 57 on or before 4 November 2021.
To use this new 2028 protection, the scheme’s rules must have included, as at 11 February 2021, an unqualified right to take scheme benefits before age 57.
For further information, see Practice Note: Increasing the normal minimum pension age (NMPA) to
Pensions
PRACTICE NOTES
THIS PRACTICE NOTE RELATES TO REGISTERED PENSION SCHEMES
Through the Finance Act 2016 (FA 2016), the government created two protection regimes to accompany the cut in the lifetime allowance from £1.25m to £1m on 6 April 2016:
fixed protection 2016 (FP 2016)—for more detail, see Practice Note: Fixed protection 2016 (FP 2016), and
individual protection 2016 (IP 2016), which is the focus of this Practice Note
IP 2016, like FP 2016, was originally designed to give transitional protection to people who had already accumulated pension savings on the basis that the standard lifetime allowance would stay at no less than £1.25m.
Although the lifetime allowance was abolished with effect from 6 April 2024, IP 2016 still offers limited transitional protection regarding a person’s rights to (i) the lump sum allowance, (ii) the lump sum and death benefit allowance, and (iii) a tax-free lump sum. This follows
Pensions
PRACTICE NOTES
The expression ‘joint venture’ (JV) is not a term with a precise legal definition under UK law. In essence, it denotes a commercial arrangement in which two or more participants agree to pool resources for the purpose of delivering an intended project, or another business activity. A JV vehicle might, for example, be established as a limited liability company, with each party acting as a shareholder.
For more information on JVs, consult the Overview Document (available to those with a subscription in Lexis+® UK Corporate).
Establishment of the JV vehicle—identify the pension issues
When forming a JV between two or more sponsoring parties, the parties to the JV must identify the pensions issues that arise from setting up such a vehicle...
Pensions
PRACTICE NOTES
ARCHIVED: This archived Practice Note summarises Lifetime ISAs, covering their legislative basis and main characteristics. It is not maintained.
What is the Lifetime ISA?
The Lifetime ISA launched on 6 April 2017 for adults aged under 40. Individuals may save up to £4,000 each year and receive a government bonus worth 25% of their contributions. Money held in a Lifetime ISA can fund a first home purchase or be taken tax free once over age 60. For more detail, see Key aspects of the Lifetime ISA, below.
In Budget 2025, the government signalled its intention to replace the Lifetime ISA with a new product targeted solely at first-time buyers. Opening a Lifetime ISA will still be permitted until the new product goes live, and current holders may continue contributing to their Lifetime ISA
Pensions
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