16 Aug 2022
I quite often come across old Defined Contribution Trust-Based pension schemes that employers have had in place before Workplace pensions or even Stakeholder pensions. I am asked, ‘What should I do with this old pension scheme, I don’t even know who these people are!’.
It is clear that some employers don’t know the full extent of their Trustees Responsibilities and duties on these old schemes which is understandable as this is a complex area to navigate.
Your legal requirements as a Trustee are dependent on the type of trust that your scheme is written under. If your scheme is written under a Master Trust managed by an insurance company, the Trustees responsibilities normally lie with the insurance company.
However, if your trust-based pension is not a Master Trust then the employer or individual trustees have a legal duty to ensure that the scheme is run in accordance with The Pension Regulators requirements.
If you have a trust-based pension scheme not written under Master Trust you should firstly identify who the Trustees are. Are they the principal employer or are they named individual Trustees? If they are named Trustees, are they still relevant in the company and can they be contacted?
And secondly, who are the members? As an employer/trustee you will receive annual statements that must be issued to members of the scheme. If you don’t have their current contact details, do you trace the members for their updated details?
- In addition to these points, there are numerous other considerations such as:
Pension Scheme returns – who in your organisation has the job of updating the Exchange and accumulating the information for the return?
What is the cost each year of your Pension Scheme levy and Pension Protection Fund Levy?
- Who prepares your Chairman’s statement? Do they include the test for Value for Money which is a recent change following new legislation?
- Are employers complying with all of the above on their old trust-based pension scheme that are quite often languishing in the background? My experience is that they are not and there could be a potential risk to the employer for non-compliance on these old trust-based scheme from The Pensions Regulator.
The Pensions Regulator state:
If you don’t comply with your duties, we may take enforcement action. You, the employer, are responsible for meeting your legal duties. If you don’t comply, you may face enforcement action including compliance notices, and penalty notices (fines).
There are options available to you to negate these responsibilities. Contact Wingate Benefits Solutions to discuss at firstname.lastname@example.org or phone 01883 332260
Don’t leave your company exposed to fines due to non action.