DC winding up


Many companies find themselves with a host of historic small to medium-sized DC arrangements.  Some may be legacy schemes from former benefit packages but others may have been inherited with corporate acquisitions.

The costs associated with older arrangements, together with the need for engagement caused by TPR’s and the DWP’s increased focus on DC governance, are leading many employers to consider winding-up their peripheral DC arrangements.

How we can help

  • Discharging benefits: schemes usually consider a range of options including transfers to other schemes, transfers to winding up policies and winding up lump sums.  Statutory requirements vary depending on the nature of the scheme that will receive the benefit, and it can prove to be impractical to implement transfers that are ideal in other respects because of compliance issues.  Our depth of experience means that we are well placed to identify potential obstacles to efficient winding up
  • Investment: advice on how the transfer can be managed so that risks are minimised and members’ interests are protected
  • Safeguarded tax protection: ensuring that members can continue to benefit from enhanced and fixed protection, and any enhanced tax terms, such as entitlements to tax free cash in excess of 25%, as this is not guaranteed
  • Trustee protection: we work with trustees and employers to identify solutions for ongoing protection including indemnities and insurance that are acceptable to both parties.

Recent Experience

We have extensive experience of winding up trust based DC schemes and have provided TPR with advice on the key legal and practical considerations and difficulties involved for trustees.

We have a clear understanding of the wider issues facing schemes and their employers, and the particular challenges that face medium sized schemes, such as lack of in-house resource and limited budgets for advisers’ fees.  Our experience covers both technical and practical points, and all solutions are pragmatic.  We work with our clients and other advisers to ensure that our advice goes beyond compliance with legislation to achieve workable solutions.