And The Law Says

Ginevra Gatrell’s updates on funding of pension schemes, and automatic enrolment

January 27, 2015


Funding of pension schemes

“The aggregate accounting deficit of the FTSE 250’s pension schemes nearly double in 2014…” say the investment consultants. This is a generalisation, but it does indicate that pension scheme trustees may be revisiting funding issues with employers and the wider group companies. This will involve not only looking at available assets and finances, but also a legal analysis of the company’s ’employer covenant’ to the scheme and the specific balance of powers between the trustee and the company (as contained in relevant scheme documentation). What could the trustees demand? Even where pension schemes have already been closed, funding remains an issue in many cases.

Automatic enrolment

The Pensions Regulator has recently reported a significant rise in compliance notices (and in some cases fines) against companies for failure to comply with the automatic enrolment employer duties – 3 notices in the quarter to 30 June 2014 and 163 notices in the quarter to 30 September 2014. This indicates that companies, certainly SMEs, are not implementing auto-enrolment correctly. As auto-enrolment is an ongoing obligation, companies should be encouraged to seek a compliance review to reduce the risk of long periods of non-compliance building up (which could be costly).

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