A company’s pension scheme is one of an employee’s most valuable benefits. Ensuring this is managed effectively is vital to instil trust and confidence in employers and trustees of workplace pension schemes.
The topic of pensions in the UK carries with it greater awareness now more than ever, particularly following the collapse of significant UK high-street businesses and retailers. The press publishes greater information, but this can often lead to confusion and misunderstandings given the complexity of this area.
The regulatory environment surrounding pensions law means that it is often changing, particularly when each budget is delivered to Parliament and where there is a change in Government.
We support clients in this ever-changing environment by providing clear and pragmatic pension law advice. We cut through the jargon, to ensure our clients are fully equipped to run their pension schemes or to manage their workforce and their employees’ entitlements appropriately and to the satisfaction of members and the Pensions Regulator (TPR).
How we can help
Pensions in the UK are highly regulated and complex, with the requirements changing frequently. We are here to help trustees and employers alike, supporting them on a wide range of pension law and compliance matters, to ensure businesses are compliant, pension schemes are well-governed, and any complaints from members of pension schemes or additional questions from governing bodies are minimised.
What we offer
Automatic enrolment (or auto-enrolment) was introduced in the UK on October 2012. Before then, it was very much the “luck of the draw” whether employers provided their employees with some form of pension arrangement, often with those working for smaller businesses having no entitlement at all.
Every employer in the UK must put certain staff into a workplace pension scheme and, subject to minimum thresholds, contribute to it. This means that all employers have specific legal duties. We understand that this can have a significant impact on companies in terms of resources.
We work with our clients, including liaising with HR and finance departments, advising on all aspects of auto-enrolment, including what information companies must provide to their staff, what their legal requirements are, and simplifying the procedure to assist companies with their ongoing duties.
We also assist companies in liaising with the Pensions Regulator where there have been investigations into potential non-compliance with auto-enrolment requirements and in respect of any enforcement action pursued by the Pensions Regulator, helping companies to understand their obligations, their options and the procedure for ensuring compliance.
Part of our service to employers and trustees of pension schemes is the preparation and review of pension scheme documentation.
Certain pension schemes have been established for decades, which can often mean that the drafting of their documentation is more difficult for our clients to decipher.
Trustees and employers need to understand their scheme documentation well to administer the pension effectively; to comply with their legal obligations, but also to ensure satisfaction in a climate where members of pension schemes have greater interest and awareness than perhaps, they may have done a decade ago.
We work with trustees and employers to help them understand how to administer their schemes based on their documentation and pride ourselves on drafting what can often be complex documents in plain English.
Our work includes the preparation, updating and interpretation of definitive Trust Deed and Rules (and consolidations of the same), Deeds of Amendment, Deeds of Appointment and Removal of Trustees, Deeds of Participation and Substitution of Employer(s), Deeds relating to apportionment arrangements, Deeds of Termination and Discharge, contingent asset documentation and communications to members in respect of all pension matters. Clear documentation can reduce the likelihood of complaints and assist all parties in running their pension schemes effectively and efficiently.
Since the 1990s, the pensions industry has (rightly so, for many reasons) become increasingly regulated. As part of this regulatory environment, the Pensions Regulator and the Pension Protection Fund were established to support the industry.
Over the last few years, the Pensions Regulator has been taking an increasingly “hands-on” approach to workplace pension scheme governance, exercising its anti-avoidance powers more frequently than ever before. We can work with businesses and trustees to guide them through the regulatory framework, including the extensive guidance and codes published by TPR to ensure compliance and governance best practice.
Our work with the Pension Protection Fund includes guiding defined benefit schemes through the Pension Protection Fund assessment period where the sponsoring employer fails, and the scheme can no longer afford to pay the promised pension. This necessitates a good working relationship with the Pension Protection Fund and other advisers. We also assist our clients in connection with contingent assets and the Pension Protection Fund’s guidance on this; working with our clients and other advisers to the required deadlines.
The funding of pension schemes is often central to discussions between trustees of schemes and sponsoring employers. It is vital to maintain good working relationships between trustees and employers, and we have extensive experience advising both on the funding process, including managing any actual or potential conflicts of interest that may arise.
This involves advising clients on liability management exercises, including the closure of schemes to future accrual and member communications surrounding this, transfer value exercises, buy-ins for different groups of members and advising trustees on the legal obligations in relation to reviewing employer covenants.
Scheme funding discussions can often involve liaising with the Pensions Regulator, and we assist trustees and employers in addressing any questions the Pensions Regulator may have in relation to funding discussions and approaches, working with other advisers, to ensure the triennial process runs smoothly.
We also have experience working with employers and other advisers in respect of the Pension Protection Fund (PPF) levy issues and supporting both employers and trustees separately in relation to structures such as asset-backed contribution arrangements.
Trustees of defined benefit pension schemes are responsible for their scheme’s investment governance arrangements, including determining its investment strategy.
As you might expect, there are strict legal obligations set out under statute surrounding pension scheme investments, including the level of involvement that sponsoring employers may have and the delegation of investment decisions.
We advise trustees on the legal aspects of their powers and decisions, including the provision of training to trustees (and employers alike) to ensure our clients understand their legal duties.
We have a particular interest and extensive experience in pension scheme investment management, working with trustees on all legal aspects of defined pension scheme investments, including the preparation of investment governance documentation (including the establishment of an investment sub-committees) and negotiating investment management agreements and fiduciary management agreements with investment banks and/or consultants.
However, as noted by the Pensions Regulator, a scheme’s investment strategy is likely to have a far greater overall impact than the investment management’s performance relative to their targets. TPR expects suitably documented investment governance arrangements appropriate for schemes’ circumstances and has published extensive regulatory guidance on defined benefit investment and trustees’ legal duties in respect of such investment.
As such, we work with trustees of these schemes to help them understand their responsibilities relating to investments, including ensuring effective governance arrangements, which in turn, breeds member and employer confidence.
Why choose us?
Our clients value our ability to translate technical jargon and complex documents into a language that is understandable, with practical and clear advice. This enables our clients to understand the background and the approach to resolving issues and taking action with their schemes.
We are based outside of the big city, but with extensive city experience, we can also offer our clients greater value for money than our direct competitors.
We can be as involved as our clients would like in assisting in the management of pension schemes from a legal perspective, from regularly leading trustee meetings to specific support and advice for any particular project where pension law expertise is required, including any internal disputes that may arise from members.
Working across our different departments as required and with strong relationships with actuarial, administration and investment firms across the country, we are able to deliver the best results for our clients, as seamlessly as possible.
With an innovative approach and transparent pricing, we aim to be recommended by every client, every time.
We have over a decade’s experience working exclusively advising trustees and sponsoring employers of pension schemes. We specialise in pensions rather than it being one of a number of practice areas within a wider group that we cover.
We have worked with the “Big Four” accountancy firms as well as more specialist investment, administrative and actuarial consultants. We also have many years’ experience working in large London and national law firms, as well as in house at a global investment bank.
We enjoy getting to know our clients with a view to establishing long relationships with them. This helps us understand the drivers behind their business and/or the pension scheme, the history of the employer, which assists in tailoring our advice and options accordingly.
The accuracy, approach and delivery of our legal advice to clients is of paramount importance to providing 5 star service to our clients. However, we understand that costs are central to working with legal advisers. We also understand that it is one of the areas that can frustrate companies when it comes to budget planning.
We have developed innovative price structures to ensure complete cost transparency so there are no hidden surprises. Our clients are then kept regularly informed of progress towards budgets. Our extensive expertise coupled with our lower rates than our competitors in bigger cities ensures value for our money and much greater client satisfaction.
Is a pension mandatory in the UK?
Whilst employees are able to opt out of membership in a workplace pension scheme, every employer in the UK are required by law to automatically enrol eligible employees into a pension scheme.
Are pensions protected by law?
How pensions are protected depends on the type of scheme.
For defined contribution schemes, if they are run by pension providers and the provider was authorised by the FCA, members can receive compensation from the FSCS. Where defined contribution schemes are trust based and the employer fails, members will still receive their pension, but it may well be a reduced amount as the costs of running the scheme would then be paid by the assets of the scheme rather than by the employer.
For defined benefit schemes, whilst assets within these schemes are protected from the employer, if the employer fails, then the scheme will either pay benefits out as they fall due if the funding of such a scheme is above a certain level, or if it is not, the PPF will assist in paying members’ pensions, albeit at a reduced rate if pensions within such a scheme are not yet in payment.
Who qualifies for a pension?
Leaving aside state pension eligibility, whether or not individuals will qualify workplace pension will primarily depend on their age and their earnings, under the auto-enrolment requirements.
What is the minimum pension contribution for 2019?
Employees and employers must pay a percentage of employees’ earnings into a workplace pension scheme. How much employees pay and what counts as earnings depend of the pension scheme employers have adopted. This has changed over recent years to seek to sufficiently support employees in their retirement provision.
Can a company stop paying pensions?
All employers must offer a workplace pension scheme by law, although they do not have to contribute if employees earn less than a particular amount.
If an employee leaves a business, they will still be a member of that pension scheme (unless they transfer their benefits elsewhere), but the employer will not be obliged to continue to pay in new contributions.