Schedules of contributions: Basics
The trustees of an occupational DB pension scheme are required to prepare, and from time to time review and if necessary revise, a schedule of contributions.
The schedule sets out the rates of the contributions payable to the scheme and the dates by which those contributions should be paid. It enables the trustees to monitor whether the contributions due to the scheme have been paid.
Principles
TPR’s code of practice on Funding Defined Benefits sets out various principles for trustees to adhere to when preparing or revising the schedule of contributions. These include:
- ensuring that the schedule is drafted sufficiently clearly to enable them to monitor payments;
- ensuring it is drafted so far as possible, to avoid the need to refer to other scheme documents. If the scheme’s rules provide for different contribution rates, the schedule should set out those rates;
- avoiding showing any due date for member contributions later than the 19th (or 22nd if payments are made electronically) day of the month following the month of deduction from pay; and
- avoiding reference to the contributions covering individual augmentations or benefit improvements, unless these were planned and due to be paid when the schedule was certified.
Administrative expenditures such as professional fees which are due to be met directly by the employer need not appear on the schedule of contributions. Where this is the case, the trustees should look to include in the schedule of contributions a statement covering this point and satisfy themselves that the employer will pay those expenses.
Commonly used abbreviations in pensions
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