Pension scheme meaning

Legislation safeguards the pension entitlements of members of occupational pension schemes and other employment‑related benefit arrangements, including workplace personal pension schemes that receive employer contributions, while they are away from work on statutory family leave. Statutory family leave encompasses: maternity leave paternity leave adoption leave parental leave shared parental leave parental bereavement leave carer’s leave Maternity leave Occupational pension schemes are taken to include a maternity equality rule requiring periods when a member is on maternity leave to be treated in the same manner as periods when they are not on maternity leave. This maternity equality rule applies to both paid and unpaid ordinary maternity leave (OML), as well as to paid additional maternity leave (AML). As a result, under this rule, time spent on OML and paid AML in a defined benefit (DB) scheme is recognised as pensionable service...

The employer and its advisers ought to reflect on the following matters: Preparatory steps From the employer, gather: a copy of the departing employee’s latest employment contract and any other documents setting out contractual terms (note: these might sit within a staff handbook) particulars of the employee’s contractual benefits pertinent details about the employee’s pension entitlements information on any shares/share options held by the employee; review the Articles of Association, any relevant shareholder agreement, and share scheme documentation. See also Shares and share options below Status of negotiations Will discussions occur directly between the parties, or via their respective legal advisers? How robust is the employer’s bargaining position? How credible are the employee’s existing or potential claims? For any dismissal, is there a fair reason and has a fair procedure been followed? Is the employer in repudiatory breach? What is the employer initially...

This Checklist This Checklist provides points to weigh up when preparing and seeking sign-off for a company voluntary arrangement (CVA) involving the Pension Protection Fund (PPF). It draws on PPF Guidance Note 5 issued in 2018 (see PPF Guidance Note 5: CVAs). When an employing company (or all participating employers in a last man standing scheme) files a CVA proposal with the court, a PPF assessment period begins. Under section 137 of the Pensions Act 2004, the PPF assumes the pension trustees’ voting entitlement (see Practice Note: The Pension Protection Fund—eligibility and entry). In practice, the PPF will typically cast a vote for or against the proposal rather than refrain. The PPF is consistently focused on avoiding any precedent that might allow pension schemes to be diluted where potential PPF entry could arise in the near future (the PPF observes that this has occurred in numerous prior CVAs). The PPF also anticipates that pension trustees will appoint their financial advisers to produce a report addressing the areas of concern...

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What is the background to the call for evidence? Following Chancellor of the Exchequer Jeremy Hunt’s Mansion House address the night before, the DWP launched the call for evidence. Issued in tandem with several other DWP publications, these materials covered a broad spread of topics affecting UK pension schemes. Their shared aim was to boost investment in UK productive finance whilst shielding members’ benefits and giving precedence to a resilient, diversified gilt market. The Chancellor characterised the proposals across the various papers as the ‘Mansion House reforms’. The DWP placed the Response alongside further papers pertinent to DB pension schemes, including: the Autumn Statement 2023, which confirms that the Government will reduce the authorised surplus payments charge, currently payable on a return of surplus to a scheme employer, from 35% to 25% from 6 April 2024; and Call for evidence outcome: Pension trustee skills, capability and culture What was the outcome? ...

What are the most significant changes introduced by the Act that pension scheme trustees need to prepare for? The most notable reforms in the Act that trustees should be ready for are: Data subject complaints: complaints about the handling of personal data must be acknowledged within 30 days and answered without undue delay. ICO enforcement powers: the Information Commissioner’s Office (ICO) now has authority to compel interviews and require the production of documents to assess compliance. Data subject access requests (DSARs): the Act codifies the ICO’s existing guidance, meaning (i) trustees must apply a ‘reasonable and proportionate’ search standard when responding; and (ii) the ‘stop the clock’ rule pauses the one-month deadline for a response. Automated decision making (ADM): the Act allows reliance on the full set of lawful bases — including ‘legitimate interests’ — when non-special category personal data is used for significant automated decisions about an individual, provided suitable safeguards are in place. ...

The Pensions Regulator (the Regulator) The Regulator is an arm’s-length public body set up under the Pensions Act 2004 (PeA 2004). Its authority to impose contribution notices and financial support directions appears in PeA 2004, ss 38–50. Although the Act does not use the label, these provisions are widely known as the Regulator’s ‘moral hazard’ powers. Their purpose is to counter the ‘moral hazard’ arising from the Pension Protection Fund (PPF): the possibility that corporate groups might organise their structures so as to heighten exposure within their pension schemes, comfortable that the PPF would intervene if the employer entered insolvency. The principal moral hazard tools—and the only ones exercised so far—are the power to issue a contribution notice (CN) and the power to issue a financial support direction (FSD). A CN compels the recipient to pay a specified amount into a defined benefit occupational pension scheme. A CN can be issued where the criteria in PeA 2004, s 38 are satisfied. These mechanisms exist to deter behaviour that would...

This Practice Note sets out the principal steps for properly bringing to an end a defined contribution (DC) occupational pension scheme—also described as a money purchase occupational pension arrangement or a trust-based defined contribution plan. Throughout this Practice Note, this type of arrangement is termed a ‘DC scheme’. The guidance applies across a range of DC schemes, including trusts that sit outside the authorised master trust framework and small self-administered pension schemes (SSASs), although the latter may, in certain cases, be excluded from particular statutory obligations or requirements. This Practice Note does not cover the winding-up of any: an ‘authorised master trust’ under the Pension Schemes Act 2017 (PSA 2017)—for further detailed information, please see Practice Note: The authorisation and supervisory regime for master trusts, contract-based DC arrangements (eg group personal pension arrangements)—for further details and guidance, see Practice Note: Winding up of personal pension schemes Statute makes distinct and specific provision for hybrid schemes (combining defined benefit (DB) and DC...

What is the Pensions Advice Allowance? Following consultation in 2016/17, the government brought in, from 6 April 2017, the Pensions Advice Allowance. It enables eligible pension scheme members to withdraw a fixed sum from their pension pot tax-free to cover holistic retirement advice. At the member’s instruction, the scheme may therefore reduce the value of the member’s pot by the advice fee and pay the funds straight to the member’s adviser. This measure stemmed from the Financial Advice Market Review, which highlighted an advice gap affecting people who require retirement planning support but cannot meet the cost from net-of-tax income or savings. It is available in addition to other existing advice allowances and payment routes for advice. These include adviser charging, which does not permit pension monies to be used to fund holistic retirement advice. For further details, see Other types of pensions advice measures below. The government’s aim is to help those preparing for retirement to use the Pensions Advice Allowance to fund holistic...

This Agreement is made on [ insert date ] Parties [ Insert Employer’s name ], whose registered office is at [ insert Employer’s address ], company registration number [ insert Employer’s company number ] (Employer); [ Insert Employee’s name ] of [ insert Employee’s address ] (you). The parties agree: Termination of employment 1.1 Your employment with the Employer [ will terminate OR terminated ] owing to [ insert reason for termination ] on [ insert date ] (Termination Date). 1.2 For the period up to and including the Termination Date, you [ will be OR have been ] paid your accrued basic salary (less deductions for income tax and primary class 1 (employee) National Insurance contributions ( PAYE Deductions )) and [ will have OR have ] received your contractual benefits [ , including a payment of £[ insert amount ] in respect of [ insert number ] days’ accrued but untaken holiday entitlement ] [...

In the Employment Tribunals Case number: [ Insert case number ] Between: [ Insert name of claimant ] (Claimant) and [ Insert name of respondent ] (Respondent) Claimant's schedule of loss 1. Details Net basic pay per week (after deductions): £[ Insert amount ] Respondent’s yearly pension contributions/annual pension entitlement: [ [ Insert amount, e.g. £x ] OR [ Insert details of pension scheme, e.g. 1/80 final salary scheme with related lump sum ] ] Yearly value of bonus/other employment perks: £[ Insert amount ] Notice period under the contract: [ Insert period, e.g. x weeks or x months ] Claimant’s date of birth: [ Insert date ] Date employment ended: [ [ Insert date ] ] Age at termination: [ [ Insert age ] ] 2. ...

ARCHIVED: This archived precedent comprises a set of recitals for a deed establishing a trust-based pension scheme. The recitals therefore serve to set out the context of, and rationale for, an agreement. Such recitals are usually not considered legally binding. This precedent is not maintained...

Practice Note: TUPE—what pension benefits should the transferee provide? The Pensions Regulator, in its auto-enrolment guidance 2, indicates that when a TUPE transfer occurs, employees who move across are regarded as new joiners of the incoming employer (the transferee)...

The Finance Act 2004 (FA 2004) sets conditions for pensions and lump sums to be authorised payments. Under FA 2004, a member’s pension from a registered pension scheme must not begin before they reach the normal minimum pension age, unless the ill-health condition is met. In the same way, most lump sums are not payable before that age. The normal minimum pension age was 50 when FA 2004 took effect on 6 April 2006, rose to 55 from 6 April 2010, and will increase to 57 from 6 April 2028, excluding uniformed services pension schemes (army, navy, air force, police and firefighters). Transitional provisions preserve members’ subsisting rights to draw scheme benefits before age 55; this is referred to as a protection pension age. The Pensions Tax Manual confirms that, to hold a protected pension age, the member must have an unqualified right to receive benefits before the normal minimum pension age, i.e. not dependent on another person’s consent (PTM062210)...

First West Yorkshire Ltd t/a First Leeds v Haigh The EAT found that fairness means a reasonable employer must give genuine consideration to any ill‑health retirement scheme before dismissing for long‑term sickness, consistent with overall fairness. In particular, where an employer offers an enhanced pension on retirement due to ill health, it will be expected to take reasonable steps to determine whether the employee is eligible for the benefit of ill‑health retirement under the relevant scheme in question...