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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
FORTHCOMING DEVELOPMENT :
Section 10 of the Finance Act 2022 is set to lift the normal minimum pension age (NMPA) from age 55 to age 57, with effect from 6 April 2028, while members of the firefighters, police and armed forces public service pension schemes are excluded from the change. The Act further provides that members of registered pension schemes may draw benefits before 57 where, on or before 4 November 2021, they already held an ‘unqualified right’ to access benefits, or were already in the midst of a substantive transfer to a scheme that, on or before 4 November 2021, conferred an unqualified right to a protected pension age of under 57. To rely upon this protection in 2028, the scheme’s rules must, as at 11 February 2021, have expressly contained an unqualified right to take entitlement to scheme benefits before reaching age 57. For
Pensions
PRACTICE NOTES
THIS PRACTICE NOTE LOOKS AT PENSIONS REDUCTION IN THE CONTEXT OF ONGOING REGISTERED DEFINED BENEFIT PENSION SCHEMES
Reducing a member’s pension entitlement (that is, cutting accrued benefits or a pension already in payment) within a continuing defined benefit occupational scheme gives rise to complex questions in modern pensions law, and there are several hurdles to clear—or navigate around—before any reduction can lawfully occur.
Key obstacles include:
sections 91–93 of the Pensions Act 1995
section 67 of the Pensions Act 1995
the provisions of the scheme’s governing documentation
Further, decreasing a pension in payment may create adverse consequences under the pensions tax regime, which must be weighed carefully before proceeding (see Reducing pensions in payment—position under the pensions tax regime below). A reduction might be considered in various contexts, for example scheme restructuring or reclaiming overpayments, and both legal and tax impacts should be
Pensions
PRACTICE NOTES
THIS PRACTICE NOTE RELATES TO REGISTERED OCCUPATIONAL PENSION SCHEMES
STOP PRESS 1:
On 18 November 2025, the Pensions Regulator (TPR) urged trustees to treat member data as their foremost ‘strategic asset’ so schemes are prepared for pensions dashboards by the final connection date of 31 October 2026. After engaging with hundreds of schemes, TPR noted improvements in data quality but pointed to gaps in value data and excessive reliance on administrators, warning that neglect could put dashboard compliance at risk. It also issued refreshed member data guidance that brings together all existing data-related guidance, sets out clearer expectations for trustees and shares best practice to strengthen data management capability. TPR adds that it is reviewing data readiness among the UK’s largest schemes and will step up engagement in 2026. For more information, see LNB News 18/11/2025 43.
STOP PRESS 2:
On 19 November 2025, the Pensions
Pensions
PRACTICE NOTES
Employers may seek to reshape a defined benefit pension scheme for several reasons, including keeping the scheme aligned with recent legislative and case law changes, aiming to harmonise pension provision across the relevant corporate group, and seeking to control or reduce future pension spend.
Types of scheme restructuring
Typical approaches to restructuring defined benefit arrangements include:
adjusting the scheme's accrual rate for future service (eg from 1/60th of final salary per year to 1/80th)
shifting from final salary to career average accrual rates
running incentive exercises (eg enhanced transfer offers)
closing to new joiners
ending future accrual (with or without keeping a link to final salary)
consolidating schemes
buying out members' benefits
For more information, see:
Pension scheme incentive exercises
Changing from final salary to career average accrual rates
Scheme
Pensions
PRACTICE NOTES
ARCHIVED
This archived Practice Note reviews an earlier form of personal pension—the retirement annuity contract—and sets out how it contrasts with today’s personal pension arrangements. For further information on personal pension schemes, see Types of personal pension schemes—overview.
Personal pension schemes—central role in private pensions sector
Personal pensions, in their different guises, occupy a central place in the UK private pensions landscape today. Launched on 1 July 1988, they provide notable flexibility, being open to:
employees (with employers allowed to pay in and obtain the tax relief without a tax charge arising for the employee)
the self-employed (and, to a degree, individuals with no earnings)
Retirement Annuity Contracts—background and aims
However, personal pension schemes were preceded by another type—the Retirement Annuity Contract (RAC). Since the introduction of personal pensions on 1 July 1988, no fresh RACs can be established, but RACs set up before that date may
Pensions
PRACTICE NOTES
What is a section 32 buy-out policy?
In pensions, the term ‘section 32 buy-out policy’—also known as a section 32 policy or pension buy-out bond—describes a specific type of buy-out policy named after section 32 of the Finance Act 1981, which has since been repealed. These arrangements were especially common before 1988, that is, before personal pension schemes appeared. As with other buy-outs, a section 32 is a deferred annuity contract. It is purchased from an insurance company and, as the name suggests, is used to buy out a member’s deferred benefit entitlements (including, where applicable, deferred contracted-out benefits) from a pension scheme, so that the benefits are transferred from the scheme to be held under the policy.
One-member arrangements
Separate from the pension scheme that originally held the member’s entitlements
Set up to pay the transferred benefits to, or in respect of, the member at a future
Pensions
PRACTICE NOTES
This guide is chiefly for trainees, newly qualified lawyers and anyone unfamiliar with pensions law. A key area is the legislation on section 75 debts (also referred to as employer debts or statutory debts), which is found mainly in:
sections 75–75A of the Pensions Act 1995; and
supporting regulations, in particular the Occupational Pension Schemes (Employer Debt) Regulations 2005, SI 2005/678 (the Employer Debt Regulations)
The employer debt regime primarily concerns employers participating in defined benefit (DB) occupational pension schemes. In very limited cases it can extend to defined contribution (DC) schemes, although those scenarios are not covered in this note. Broadly, the rules allow a non‑priority liability to arise, owed by an employer (or multiple employers) to an underfunded DB scheme, when a ‘section 75 triggering event’ occurs.
Triggering events
There are three triggering events:
when an employer participating in a DB scheme experiences an
Pensions
PRACTICE NOTES
This Practice Note looks at pensions-related issues that can arise under settlement agreements within the arena of English law.
Settlement (or compromise) agreements are frequently used in the employment law sphere to resolve and conclude outstanding claims brought by employees against employers (and vice versa), particularly on the termination of employment. These claims can stem from multiple sources, such as statutory rights, contractual obligations in the relevant employment contract(s), or from common law areas including tort, for example allegations of negligence.
statute
the relevant contract(s) of employment, or
areas of common law such as tort (for example, claims alleging negligence)
Claims may arise at any point in the employment lifecycle—at recruitment, during the period of employment, or upon departure—and can involve intricate and costly issues. This is particularly true where the settlement agreement concerns senior executives, which is frequently the
Pensions
PRACTICE NOTES
What is a SSAS?
A SSAS is an HMRC-registered pension arrangement designed to deliver defined contribution (DC) benefits for no more than 11 members, typically within smaller, family-run or closely managed companies. As a result, the membership commonly comprises the company’s proprietors alongside other key or senior staff, and may include their close relatives even where those relatives are not employees. SSASs are usually created by the sponsoring employer as trust-based occupational schemes. Members are required to act as the scheme’s trustees; however, a professional trustee can be appointed to help with administration. If no professional trustee is engaged, the member trustees often retain an actuarial consultancy to advise on running and administering the scheme. Contributions can be paid by members and/or the employer. Because it is a registered pension scheme, contributions qualify for tax relief. For more detail, see Practice Note: Member and
Pensions
PRACTICE NOTES
From 1 October 2012, the duty on employers to nominate and facilitate access to a stakeholder pension scheme (as set out in section 3 of the Welfare Reform and Pensions Act 1999 (WRPA 1999)) ceased, as the new requirement by employers to enrol workers automatically into an automatic enrolment scheme (introduced by the Pensions Act 2008) took effect thereafter. However, unless a relevant exception applies (eg where an employer is notified that a designated stakeholder pension scheme has begun winding up), employers remain under an ongoing obligation, as applicable, in respect of relevant employees, to deduct employee contributions to any existing stakeholder scheme from pay, as appropriate, and forward them to the trustees or managers of the schemes. In addition, both existing and newly created stakeholder pension schemes must continue to be run in line with the statutory
Pensions
PRACTICE NOTES
FORTHCOMING CHANGE :
The Pensions Regulator (TPR) has opened a consultation on its new enforcement strategy, signalling a move to more proactive and prudential supervision. The draft strategy unveils a framework oriented around four core outcomes: prevention, reparation, accountability and saver confidence, buttressed by five strategic aims: prioritising key risks to savers, taking firm and timely action on non-compliance and economic crime, harnessing data for smarter enforcement, working with the wider sector for greater effect, and improving transparency to strengthen trust and behaviour. The proposals are intended to bolster TPR’s capacity to tackle emerging risks and breaches across pensions through a nimbler, more collaborative model. Consultation closes on 11 November 2025. TPR plans to issue the final strategy and its consultation reply in early 2026. Later in 2026, TPR also expects to review its complete set of published policies once the strategy is in place to
Pensions
PRACTICE NOTES
This guide is chiefly intended for trainees, recently qualified lawyers and others who are new to, or unfamiliar with, pensions law. Aside from HMRC (and, arguably, the Pension Protection Fund (PPF)), the Pensions Regulator is probably the key statutory authority in the pensions industry. Constituted as a body corporate under section 1 of the Pensions Act 2004 (PeA 2004), the Pensions Regulator took over from the former regulator, the Occupational Pensions Regulatory Authority (OPRA), on 6 April 2005.
Role of the Pensions Regulator
The Pensions Regulator’s remit is broader than OPRA’s and, importantly, it is not limited solely to occupational pension schemes. Its principal objectives include:
to safeguard benefits under occupational pension schemes for, or in respect of, members of those schemes
to secure benefits under personal pension schemes for, or in respect of, members of such schemes who are employees with direct payment
Pensions
PRACTICE NOTES
The Pensions Regulator possesses a range of powers under the Pensions Act 1995 (PA 1995) in relation to the winding up of occupational pension schemes...
Pensions
PRACTICE NOTES
This Practice Note outlines the remit of the Pensions Regulator (TPR). For details on TPR’s role specifically regarding public sector pension schemes, see the Practice Note in respect of public sector schemes.
Background to the role
TPR, an executive non-departmental public body of the Department for Work and Pensions, is the UK regulator for work-based pension schemes. The office was established on 6 April 2005 by the Pensions Act 2004 (PeA 2004), s 1, replacing the Occupational Pensions Regulatory Authority (OPRA), the former pensions regulator. TPR’s remit and powers are, however, considerably wider than those of its predecessor.
Under PeA 2004, s 5(3), a ‘work-based pension scheme’ means:
an occupational pension scheme
a personal pension scheme where there are ‘direct payment arrangements’ for one or more members of the scheme who are employees, or
a stakeholder pension scheme
For further
Pensions
PRACTICE NOTES
What are the moral hazard powers?
In essence, the Pensions Regulator’s (TPR) moral hazard powers under the Pensions Act 2004 (PeA 2004) and related regulations permit it to look through corporate structures and assign liabilities to third parties that are connected and associated with the employer of a defined benefit pension scheme, where specified statutory criteria are fulfilled as set out in applicable legislation...
Pensions
PRACTICE NOTES
This introductory guide, dealing with trust-based occupational pension schemes, is chiefly for trainees, newly qualified lawyers and others, and anyone new to or unfamiliar with pensions law.
A bulk transfer involves moving a defined cohort of members from one pension scheme (the transferring scheme) to another (the receiving scheme).
Under such a transaction, the transferring scheme pays a single, aggregated transfer amount to the receiving scheme, covering all of those members.
Those members then immediately cease to have benefit rights in the transferring scheme and instead acquire benefits under the receiving scheme.
This beginners’ guide outlines the various forms of bulk pension transfer that may take place in practice.
For a concise introduction to individual pension transfers, please refer to Practice Note: Individual pension transfers—beginners’ guide.
Active members
If active members are included in a bulk transfer, careful consideration must be given to the basis (if any) on which they will build up
Pensions
PRACTICE NOTES
THIS PRACTICE NOTE APPLIES TO REGISTERED OCCUPATIONAL PENSION SCHEMES
Trustee reporting duties have grown markedly over the years, mainly owing to the establishment of the registered pension scheme framework and regime and the creation of the Pensions Regulator (TPR), which depends, at least in part, on trustees’ both prompt and accurate reporting of scheme affairs and matters to fulfil its statutory objectives. The following are trustee reporting obligations.
The duty to report notifiable events
Within the notifiable events framework, trustees must comply with requirements set out in the following sources:
sections 69–69A of the Pensions Act 2004 (PeA 2004), as amended
the Pensions Regulator (Notifiable Events) Regulations 2005, SI 2005/900 (the Notifiable Events Regulations)
TPR’s notifiable events directions
TPR’s General Code module on notifiable events
TPR's code-related guidance on the notifiable events framework
The framework applies only to schemes which are
Pensions
PRACTICE NOTES
This practice note applies to registered occupational pension schemes in wind-up (excluding those entering the Pension Protection Fund)
A central feature of the winding‑up of occupational pension schemes is ensuring that, so far as practicable, the process enables the trustees of the scheme to be released from ongoing responsibility for the scheme, its assets and its liabilities. There are several actions trustees can take to facilitate this. These steps assist trustees in concluding their role once winding‑up is completed. and reduce residual exposure where practicable. For guidance on measures to protect trustees from liability in a continuing scheme, see Practice Note: Trustee liability and protection in pensions.
Statutory discharge
Where a pension scheme is being wound up and falls within s 73 of the Pensions Act 1995 (PA 1995) (eg a registered defined benefit occupational scheme), a statutory discharge may be available to the trustees under PA 1995, s 74
Pensions
PRACTICE NOTES
When reaching decisions, trustees are expected, among other obligations, to:
act in the best interests of scheme beneficiaries
act for a proper purpose
possess sufficient knowledge and understanding of pensions law
consider all relevant factors and ignore those that are irrelevant
In putting this principle into effect, trustees need to determine:
what amounts to a relevant factor, and
the extent to which the trustees can (or ought to) take that factor into account
For further information on trustee duties, see Practice Note: Duties of pension trustees.
These matters were considered by the High Court in Independent Trustee Services Ltd v Hope (the Ilford case), which explored the relevance of the Pension Protection Fund (PPF) in trustees’ decision-making.
The Ilford case—the facts
Independent Trustee Services Ltd was the sole corporate trustee of the Ilford pension scheme, a defined benefit
Pensions
PRACTICE NOTES
THIS BEGINNERS’ GUIDE APPLIES TO DEFINED BENEFIT OCCUPATIONAL PENSION SCHEMES
This Beginner’s Guide explores the legal framework in relation to the funding of registered defined benefit occupational pension schemes (DB schemes), including:
the statutory scheme-specific funding regime and how it operates
the funding and investment strategy
actuarial valuations
scheme funding negotiations
the Pensions Regulator’s approach to scheme funding, and
methods of managing scheme funding deficits
The statutory scheme-specific funding regime
The Pensions Act 2004 (PeA 2004) brought in the current ‘scheme-specific’ funding regime for DB schemes. It took effect on 30 December 2005, superseding the earlier Minimum Funding Requirement (MFR) and transposing into UK law the scheme funding provisions of the IORP Directive 2003/41/EC on the activities and supervision of institutions for occupational retirement provision, which was later repealed and recast as the Archived Directive (EU) 2016/2341 (Archived IORP II). Note that
Pensions
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