The establishment, administration and control of state pension schemes.

Personal Accounts

6 April 2005

Objectives:

1. protect members benefits

2. reduce risk of schemes falling into PPF

3. promote good administration of pension schemes

• issuing contribution notices
  • Where there has been an improper avoidance of a section 75 debt on the withdrawal of a participating employer.
• issuing financial support directions
  • The requirement for companies to provide long-term financial support for a scheme in deficit where the scheme employer is a service company within a group of companies or is insufficiently resourced.
• calculating and collecting PPF levy
• issuing improvement notices
  • i.e. trustee breach of legislation
• freezing a scheme that's under investigation
• suspending, prohibiting and removing trustees
• impose obligations to report breaches
• repatriating funds improperly 'liberated' from schemes
• gathering information
• issuing Codes of Practice

• Establish and maintain and register of schemes
• Significant breaches of law will be reported to Regulator by trustees and advisers (whistle blowing)
• employers and trustees required to inform regulator whenever a 'notifiable event' occurrs which could adversely affect the security of members' benefits

A decision to seek to compromise a debt owed by an amployer to a scheme.

 A breach of an employer's banking covenants.

• change to members
• BCE's
• enhanced and primary protection
• payment of a lump sum after age 75
• suspension of an ill-health pension
• unauthorised payments

• Purpose: to ensure that where a company with a UK DB schemes becomes insolvent, and its PF not sufficiently funded, members can be reassured that they will still receive the majority of benefits to which they are entitled, namely:
  • 100% of pension in payment (so long as member reached NRA) £27,778
  • 100% of pension entitlement if over NRA
  • 90% of accrued pension entitlement £25,000
  • increases to pension in payment: LPI 2.5%
  • deferred rights revalued at LPI 5%
  • survivors' benefits of 50% of members benefits

• Those not eligible:
  • DC schemes
  • those that commenced wind up prior to 6 April 2005
  • those with fewer than 2 members
  • those with fewer than 12 members where all members are trustees
• Eligible:
  • Qualifying insolvency event
  • Assessment period during which PPF will decide whether to take responsibility
  • Must do so where a scheme's assets are insufficient to pay benefits equal to those that would be payable by the PPF and an insolvency practitioner has issued a 'Scheme Failure Notice'

• Risk-based (80%)
  • difference between assets and liabilities
  • likelihood of insolvency event occurring
  • other factors which the board considers appropriate
• Scheme-based levy (20%)
  • amount of liabilities to members
  • number of members
  • pensionable earnings of active members
  • other factors that may be prescribed in regulations

What schemes and members qualify for FAS?

Compensation level

• Schemes other than DC and public sector
• Commenced wind up between 1 January 1997 and 5 April 2005
• employer suffered an insolvency event on or before 28 February 2006.
• Members:
  • current and former members if their benefits are unlikely to be satisfied in full and they reach NRA by 14 May 2007.
  • those in receipt of survivors benefits when the scheme commenced wind up if they are due to reach NRA by 14 May 2007.
• Compensation level:

  • 80% of expected pension

  • cap of £12,000

• Sole regulator of the financial service industry
• T's need to be authorised by FSA if they:
  • deal in investments
  • arrange deals in investments
  • manage investments
  • offer investment advice
• Don't need authorisation if they delegate to authorised investment manager

What does TPAS stand for?

What is it responsible for?

• The Pensions Advisory Service.
• Provides free assistance to members of the public who have difficulty resolving issues with trustees, administrators or providers.
• Independent, grant-aided, non-profit making company limited by guarantee which has a network of local volunteer advisers who are experienced pensions professionals
• Remit is to explain benefits to members and liaise directly with trustees or administrators to provide members with further info or to assist a member to obtain his correct legal entitlement

• Investigates and decides complaints and disputes about the way in which pension schemes are run.
• Completely independent and acts as an impartial adjudicator
• Established on 1 October 1990
• Appointed by Secretary of State under PSA93
• Ombudsman can appoint his own staff
• Budget taken out of PPF levy

What does the Ombudsman have jurisdiction over?

Are his determinations binding?

• Only certain complaints:
  • complaints of maladministration
  • disputes of law or fact
  • certain other complaints or disputes
• Determinations are not binding. Parties have a right to appeal to the High Court on a point of law.
• Generally costs can't be awarded against a complainant even if his complaint is not upheld.

• An 'interested person' can make application to PPF Ombudsman to review any matter which has been reconsidered by the Board of PPF (under its two stage review procedure), including:
  • calculation of PPF levy
  • Complaints of maladministration
• Ombudsman may decide the dispute or refer it back to PPF board with directions on how it should proceed.
• Decisions can be appealed on points of law to High Court
• Going forward, the Government intends for the Ombudsman to be funded by means of additional levy

What does NISPI stand for?

 What is it responsible for?

What does NISPI require? (3)

• National Insurance Services to Pensions Industry.
• Regulates all matters concerning contracting out.

1. 3 months prior to effective date of contracting out - 'Notice of Intention to Elect to Contract Out' issued with agreement of trade union (no trade union then shorter period of notice may be allowed)
2. 'Election to Contract Out' on appropriate basis must be completed and sent
3. Submission of Information Sheet and a Documentation Certificate

• Rules will need to be amended
• Employers must confirm:
  • scheme is not excluded from contracting out
• • scheme meets the employer-related investment requirements
  • (COSR): provide actuarial certificate confirming RST.
  • COMP: confirm minimum payments and investment of those payments.

• Is the central registrar of those who use personal information held on any filing system which allows specific information to be readily accessible.
• Maintaining a register of those who use personal information is used in this way.
• Enforcing the registration procedure and the 8 principles of data protection.

• Social Security Act 1990 provided for register of pension schemes
• To enable individuals to track down their pension benefits
• DWP from 6 April 2005.
• Schemes must register within 3 months of being established. 
  • previous scheme names
  • names of current and former participating employers.