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Employers can help promote retirement benefits for their employees in a number of ways including occupational schemes.
Occupational pension schemes require the establishment of a trust in order to gain the tax advantages and to ensure that the assets of the pension scheme are kept separate from those of the employer. We outline in this factsheet the main responsibilities of occupational pension scheme trustees. If your business is in the Northampton and Rugby area we, at J R Watson & Co Accountants, are able to advise you on the accounting and audit requirements of your scheme.
Many employers offer their staff an opportunity to save for their retirement through an occupational (or company) pension scheme.
Those employees who join the scheme need to have confidence that the scheme is being well run.
The role of pension scheme trustees is very important in ensuring that the scheme is run honestly and efficiently and in the best interests of the members.
We outline in this factsheet the main responsibilities of occupational pension scheme trustees.
The Pensions Act 1995 (the Act) brought about a number of major changes to the way occupational pension schemes are run. The 2004 Pensions Act brought about further change and introduced, in April 2005, The Pensions Regulator (TPR) as the UK regulator of work-based pension schemes.
TPR has an important role in the pension sector. Its objectives, as set out in legislation, are to:
TPR has three core powers that underpin its regulatory approach:
In fulfilling its role, TPR produces important guidance for those involved with pension schemes including trustees as well as auditors and actuaries. This guidance is available from TPR's website.
The Pensions Act 2008 introduced a requirement on UK employers to automatically enrol all employees in a 'qualifying auto-enrolment pension scheme' and to make contributions to that scheme on their behalf. Enrolment may be either into an occupational pension scheme or a contract based scheme.
Many contract based schemes are group personal pensions where an employer appoints a pension provider, often an insurance company, to run the scheme. The National Employment Savings Trust (NEST) is a government backed pension scheme that employers can use for auto enrolling employees.
Compliance with the regulations started from 2012 for the largest employers. The deadline for being compliant (an employer’s ‘staging date’) is determined by the number of people in their PAYE scheme and for smaller employers is between 2012 and 2018.
Further information is available here.
Employers can help promote retirement benefits for their employees in a number of ways including:
Group personal pension schemes and stakeholder schemes are personal plans in individual member's names, where the employer simply acts as an administrator. There are no accounting or audit requirements for these types of schemes.
An occupational pension is an arrangement an employer can use to provide benefits for their employees when they leave or retire.
There are two main types of occupational pension scheme in the UK:
Whatever the type of scheme, it will usually have trustees.
Most company pension schemes in the UK are set up as trusts. There are two main reasons for this:
A trustee is a person or company, acting separately from an employer, who holds assets for the beneficiaries of the pension scheme. Trustees are responsible for ensuring that the pension scheme is run properly and that members' benefits are secure.
In fulfilling their role, trustees must be aware of their legal duties and responsibilities. The law requires trustees to have knowledge and understanding of, amongst other things, the law relating to pensions and trusts, the funding of pension schemes and the investment of scheme assets.
A code of practice has been issued by TPR explaining what trustees need to do in order to comply with the law in this area. Trustees should arrange appropriate training as soon as they are appointed and should then continue with their learning to keep their knowledge up to date. New trustees have six months from their appointment date to comply with this requirement.
Trustees have a number of very important duties and responsibilities, which include:
In addition to these general duties, trustees also have a number of specific duties and tasks that they must carry out. The main tasks are to ensure the following happen.
The employer accurately pays over contributions on time. There are strict rules covering this area.
The pension fund is properly invested in line with the scheme's investment principles and relevant law.
Suitable professional advisers are appointed as running a pension scheme is complicated and often specialist advice will be needed.
Full and accurate accounting records are kept, which include records of past and present members, transactions into, and out of, the scheme and written records of trustees' meetings.
Members and others are provided with information about the scheme and their personal benefits.
TPR is provided with information required by law for the register, that the scheme's annual return is completed and the annual levy for the scheme is paid.
Where a breach of law takes place and it is likely to be materially significant to TPR, trustees and indeed others involved in running the scheme have a legal duty to report the breach to the regulator. Code of practice 01, 'Reporting breaches of the law' provides guidance on the factors that should be considered when deciding to make a report.
In addition, trustees also have to notify TPR when particular scheme-related events happen. These are known as 'notifiable events', also the subject of a code of practice.
The trustees of most schemes must make an annual report available within seven months of the scheme year end. The report usually includes:
If something does go wrong with the pension scheme, trustees may be held personally liable for any loss caused as a result of a breach of trust. This could happen when, for example:
The rules of the pension scheme might protect trustees from personal liability for a loss caused by breach of trust, except where it is due to their own actual fraud. In some cases, the employer may provide indemnity insurance for the trustees.
If you are located in the Northampton and Rugby area we would be pleased to discuss your role as an occupational pension scheme trustee in more detail. We are also able to advise on the accounting and audit requirements of your scheme. Please contact us at J R Watson & Co Accountants for further information.
18 Mar 2020
Chancellor Rishi Sunak has set out a package of temporary, targeted measures to support public services, people and businesses through the period of disruption caused by COVID-19.
12 Mar 2020
The Chancellor Rishi Sunak presented his first Budget on Wednesday 11 March 2020.
05 Mar 2020
The Prime Minister, Boris Johnson, has announced that employees will be entitled to Statutory Sick Pay (SSP) from day one when self-isolating.
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