Alerts

Focusing on breaking news

• Exiting ongoing schemes - the employer debt rises

  The Occupational Pension Schemes (Employer Debt etc) (Amendment) Regulations 2005 were finally published on 18 August and come into force on 2 September 2005.

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• Member-nominated trustees

  The Pensions Act 2004 (PA 2004) will require that at least one-third of the total number of trustees of occupational pension schemes are member-nominated trustees or directors (MNTs). The current proposal is that this moves up to 50% in 2009. PA 2004 represents a change in direction from the current MNT provisions, which allow an employer to propose alternative arrangements which differ from the legislative requirements (the "opt out"). This will no longer be possible and the existing trustees will need to secure compliance with the new provisions. To help trustees, the Pensions Regulator (TPR) published a draft code of practice - "Member-nominated trustees and directors - putting arrangements in place" - on 8 July 2005. The consultation on the associated draft Regulations was published by the DWP on 15 July 2005.

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• PPF news - risk-based levy

  On 12 July 2005, the Board of the Pension Protection Fund (PPF) published its proposals for the introduction of the risk-based levy for all schemes potentially eligible for the PPF. The risk-based levy will apply from the financial year 2006/7. As the Pensions Act 2004 makes provision for at least 80% of the PPF levy to be risk-based, this information is crucial for trustees and employers of eligible schemes.

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• Changing scheme benefits - the all new section 67

  From 6 April 2006, employers and trustees contemplating changes to occupational pension schemes will have to contend with a significantly revamped section 67 of the Pensions Act 1995. The source of the new sections 67 through to 67I is the Pensions Act 2004 (PA 2004). The intention is to give schemes greater flexibility to introduce changes, with the trade off being that for some there will be even more hoops through which to jump to safeguard members' rights. Draft regulations which will supplement the provisions under PA 2004 are currently in the pipeline. However, on 8 July 2005, TPR published a draft code of practice for consultation - "Modification of subsisting rights". Here we outline the new look section 67 and TPR's current thinking.

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• New protection for early leavers

  From 6 April 2006, members who leave occupatioanl pension schemes with at least three months' pensionable service, but without having reached the scheme's threshold for providing accrued (or vested) benefits, will have new rights. Trustees will need to give such members the option of either a contribution refund or a cash transfer sum. Like a lot of new requirements, the Pensions Act 2004 contains the bones of the new provisions but we have been waiting for regulations and a code of practice to flesh out the detail. The draft code of practice was published for consultation by the Pensions Regulator in May, followed by the draft regulations on 29 June 2005.

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• Consultation! Consultation!

  The obligation on employers to consult employees regarding major pension scheme changes from 6 April 2006 is the focus of the latest consultation to emerge from the DWP. The driver behind the requirements to consult is the EC Directive on Information and Consulting Employees. This Directive was implemented in the UK in terms of employment rights from 6 April 2005, but the pensions aspects were left to the Pensions Act 2004 (PA 2004). Sections 259 - 261 of PA 2004 set out a framework for requiring employers to consult about certain "prescribed decisions" relating to future benefit provision. Two sets of draft Regulations have now been published for consultation which help to flesh out the changes which are likely to be affected.

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