Roderick
Ramage
marketing
notes for solicitors promoting pension law services
DISCLAIMER
These notes are not advice to any
person and may not be taken as a definitive statement of the law or practice in
general or in any particular case. The author does not accept any
responsibility for anything that any person does or does not do as a result of
reading it.
Pensions law
Pensions
are a key part of everyone’s and every business’s financial planning in spite
(perhaps because of) of all the bad news
around us. There are both public and
private schemes to provide pensions on retirement, with increasing emphasis on
private provision. The financial aspects
need, it goes without saying, good independent financial advice for businesses
as well as individuals, but there are also important legal issues involving
pensions, where not only pension law specialist but employment, commercial,
private client, family law and dispute resolution teams can offer you help and
guidance.
commercial
Top of everybody’s mind at present are final salary schemes. Employers should be aware that closing their
final salary scheme can amount to handing the trustees a stick to beat them
with. Closing a pension scheme often
hands control of it to the trustees, who must maximise what they can claim for
the members, even if it means winding up the scheme and forcing the employer
into administration or liquidation. This
exercise requires careful planning. Do
take legal as well as accountancy advice before taking any irrevocable steps.
In not-so-recent memory the canny investor buying
businesses looked for companies with large pension scheme surpluses. Very rarely is that so now. When buying
or selling a business or shares a key issue are
whether there is a pension scheme deficit and who will be responsible for it
after completion. Pensions due diligence
must start early in the negotiation.
And TUPE? The European court of Justice
has shown pensions are not wholly exempt from the Transfer Regulations and that
some pension liabilities can pass to the transferee even though no assets are
transferred to support them. In
addition, employees in an occupational pension scheme who transfer under TUPE
are entitled to a pension from their new employer.
Public sector outsourcing is also fraught
with pension problems. The Government’s
fair employment policy means that employees who transfer to a contractor by
TUPE on an outsourcing contract, or from one contractor to another, are
entitled to a pension, usually final salary, matching the public sector scheme
they were in before the transfer. Do
enquire about the pension risks before you sign anything.
employment
What will you provide for your employees? Will you leave them to provide for
themselves? Will you match their
contributions? What about the auto-enrolment? 2012, when this comes into force may seem a long way off, but a lot of
long term planning is needed, pensions, payroll, employment terms. No changes of pension scheme terms ought to
be contemplated without taking automatic enrolment into account. You cannot draw employment
terms without considering pensions.
Pensions can also be a major part of compensation calls for unfair
dismissal. Have you altered your
pension scheme since A-Day (6 April 2006) to take advantage of, eg,
early flexible retirement, the removal of the 15% cap on members’ contributions
and the ability to take up to 25% of your pension fund as a tax free lump
sum? You may have checked that your
employment terms are not age-discriminatory, but is your pennon scheme
compliant? Will your death in service
insurance under a conventional registered scheme affect your high paid
employees’ lifetime allowance or should a different life policy under a
different tax regime be arranged?
private clients – mostly wills and trusts
Pensions are a part but only part of your financial planning. In the short run the tax saving may be very
attractive, but maximising your pension contributions might be even more
attractive to commission hungry advisers.
You need a wider view than tax alone
(let alone tax and commission!).
Family wealth and pensions is where commercial and private client work
overlap. Small pensions schemes (still
known as SSASs even after A-Day) let you save for your pension and, in a tax
privileged environment, invent back into our business, or, say, the property in
which it trades.
family law
Earmarking or pension splitting?
The first was discredited by many before it started and is not very much
used. Pension splitting is
different. If can give the ex-spouse of a
scheme member a share of the member’s pension scheme, and should be part of
every financial settlement on divorce or settlement, clean break or with
on-going financial maintenance.
dispute
resolutions
Are you still
suffering the aftermath of pensions misselling?
Has your pension scheme let you down in some way and failed to give
redress through its internal disputes resolution procedure? Do you need to make a complaint to the
Pensions Ombudsman for maladministration?
If as a trustee has a member complained against you? Has the Pensions Regulator threatened you
with an investigation and perhaps a fine for non-compliance with some pensions
regulations? These and many more matters
can bring pension scheme members, trustees and employers into conflict and, as
with all dispute resolution, the sooner the problem is investigated the better.
END