Trustee Good Practice Guide

Guidelines for trustees managing pension schemes through the Pension Protection Fund assessment period

Welcome

Introduction

The assessment process

Principles

Key roles and responsibilities

Reporting

Feedback and performance management

Tools

Glossary

National Insurance Services to Pensions Industry (NISPI)
A directorate within the National Insurance Contributions Office. The National Insurance Contributions Office is part of HMRC.

NISPI deals with occupational pension schemes and appropriate personal pension schemes that are contracted out of the state additional pension.

Notification date
The day on which the Board notifies the trustees or managers of the scheme:

in accordance with regulation 3(3)(b), (10)(b) or (d) of the date on which the assessment period began, ie the assessment date, or
of the request for information.

Pensions Act 2004
The Pensions Act 2004 is an Act of Parliament to improve the running of pension schemes.

Pensions Tracing Service
A service operated by the Pensions Service allowing members of pension schemes to trace lost pension scheme benefits.

The Pensions Regulator
The UK regulator of work based pension schemes. The Pensions Act 1995 and the Pensions Act 2004 gives the Pensions Regulator a set of specific objectives:

to protect the benefits of members of work based pension schemes
to promote good administration of work based pension schemes, and
to reduce the risk of situations arising that may lead to claims for compensation from the PPF.

The Pensions Service
Part of the Department for Work and Pensions (DWP) which is responsible for administering and paying the state pension.

Qualifying insolvency event
A qualifying insolvency event in relation to the employer of an eligible scheme is an insolvency event of a description prescribed under section 121 of the Pensions Act 2004 that occurs on or after 6 April 2005. This is irrespective of any previous insolvency event prior to this date. Please see the PPF website for the list of qualifying insolvency events.

Section 120 notice
The statutory notice for an Insolvency Practitioner to notify the PPF that an insolvency event has occurred in relation to a company that sponsors an occupational pension scheme.

Section 143 valuation
An actuarial valuation prescribed under section 143 of the Pensions Act 2004. See assessment process section 3 for further details.

For additional information please consult the following documents, which are available on the PPF website:

Guidance for undertaking the valuation in accordance with section 143 of the Pensions Act 2004 www.pensionprotectionfund.org.uk/ section_143_guidance_sep06.pdf

Top ten tips for actuaries preparing section 143 valuations www.pensionprotectionfund.org.uk/ top_10_tips_.pdf

Stakeholders
In this instance, stakeholders are individuals or organisations that have a direct interest in a scheme. In the case of an occupational pension scheme these include:

trustees
employers
employees
advisors, and
regulatory bodies.

Trust Deed and Rules
The Trust Deed and Rules are the documents which govern the scheme and set out how the benefits are calculated and payable.

Trust
A legal concept whereby assets are held by one or more persons (the trustees) for the benefit of others (the beneficiaries) for the purposes specified by the trust instrument. The trustees may also be beneficiaries.

Trustee Knowledge and Understanding
The Pensions Act 2004 (sections 247-249) requires trustees to have knowledge and understanding of the law relating to pensions and trusts and the principles relating to the funding of occupational schemes and the investment of scheme assets. Trustees are also required to be conversant with their own scheme’s policy documents. (The Pensions Regulator has taken the phrase ‘conversant with’ to mean having a working knowledge of those documents such that the trustees are able to use them effectively when carrying out their duties as trustees.)

Trustee Toolkit
An online learning system developed by the Pensions Regulator to help trustees meet the requirements for trustees knowledge and understanding in relation to occupational pension schemes.

www.trusteetoolkit.com

Winding-up
The process of terminating an occupational pension scheme, usually by applying the assets to the purchase of immediate annuities and deferred annuities for the beneficiaries, or by transferring the assets and liabilities to another pension scheme, in accordance with the scheme documentation or statute (section 74 PA95).

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