Nothing is certain but death and taxes…I always thought this was quite a good proverb before I became a pensions lawyer. But after helping various trustee clients through lump sum death benefits and children’s and dependants’ pensions, I now know that not much is less certain than the distribution of death benefits. Lump sums are the worst: the trustees have to pick who gets the benefit, within certain limits. How far do trustees need to dig to be sure they are picking the right person? Answer: much deeper than many trustees think…
Archive for the ‘Trustees’ Category
Here’s the situation: a pension scheme member, considering retirement or redundancy options, asks for a benefit quote. Unfortunately, there’s a substantial error in the quote, but no-one spots it and the member takes their life-changing decision. When the mistake comes to light, does the member bear any responsibility for having failed to spot it? (more…)
The duty to auto-enrol workers into pension saving draws ever closer. All employers face the challenge of explaining the new regime to their workforce in the run-up to their staging date, so that workers can understand the flurry of information that arrives around their auto-enrolment date. Keen to help, NEST has published a set of ‘Golden Rules‘ for talking to members about pensions and auto-enrolment. (more…)
One of the difficult questions we get asked is – how far do trustees have to go in checking how employers exercise their powers under pension scheme’s rules? Normally trustees can accept what the employer says at face value – and indeed many schemes’ rules tell them to do just that. They routinely do it on, for example, information about what a member earns. On straightforward factual information like this, I do not see that trustees need look further – unless there is something drawn to their attention which casts doubt on what the employer has said. It is in cases where a degree of judgment is involved that trustees are expected to check what the employer has said.
It sounded like a simple enough idea in principle: the new, lower, annual allowance for pension saving could lead to hefty tax charges for some members – substantially in excess of their actual income for the year – relating to increases in pension benefits which won’t translate into cash in hand for years or possibly decades to come. Some members might not be able to pay that tax bill, so the neat solution devised by the Treasury was to allow members to require their pension scheme to meet the annual allowance tax charge instead of paying it personally, with a corresponding deduction from pension – the facility known as ‘scheme pays’. (more…)