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Pension scheme wind-ups: new reporting requirements
Alan Cottle from Barnett Waddingham's Cheltenham office explains how new regulations affect how the trustees of pension schemes will have to keep members and other parties informed during the winding-up process.
This article deals with new requirements for trustees of schemes in wind-up to provide regular reports to OPRA - for some schemes, the first such reports had to be made by 1 June 2002.
At present OPRA believe there are at least 25,000 schemes in wind-up, the Pension Schemes Registry has a list of about 10,000 and NISPI are aware of about 20,000 contracted-out schemes. It is also estimated that nearly 2,000 of the contracted-out schemes have been winding up for over 10 years.
Generally, the intent of the new law is
- To speed up the wind up process
- Provide greater visible accountability on those involved in the process
- Give OPRA powers to monitor and take action to speed up and improve the process.
The requirement for trustees to report to OPRA under these regulations only applies to Schemes which started to wind-up on or after 1 April 1973.
The date of the first report is in accordance with the following:
|
From |
Before |
Report before |
| Winding up commenced: |
1 Apr 1973 |
1 Jan 90 |
1 Jun 02 |
|
1 Jan 90 |
1 Jan 93 |
1 Apr 03 |
|
1 Jan 93 |
1 Jan 96 |
1 Apr 04 |
|
1 Jan 96 |
1 Jan 99 |
1 Apr 05 |
|
1 Jan 99 |
1 Jan 02 |
1 Apr 06 |
If winding up commenced after 1 April 2002 then the first report is to be made is in the period between 3 years and 4 years after winding-up commenced.
If winding up commenced after 1 April 2003 then the first report to be made is in the period between 3 years and 3 years 3 months after winding-up commenced.
Second and subsequent reports
Subsequent reports must be made no more than 12 months after the latest date for the previous report.
Contents of First Report
Facts:
- Name of scheme
- Date winding up commenced
- Registry number
- Nature of benefits
- Whether an IT has been appointed
- Name of Scheme Actuary
- Statement re administrator.
Opinions:
- Estimate of date of completion of winding up
- What steps have been completed
- What steps remain to be completed
- Estimate of when each of these remaining steps will be completed
- Whether any particular difficulties are delaying winding up.
Contents of Second and Subsequent Reports
The information for a second report is similar to that for a first report except that if in the first report steps were to be completed prior to the date of the second report you have to provide OPRA with the reasons for any failure.
Members can request copies of all reports and therefore what trustees tell OPRA can be checked by the members to ensure it is the same information they are receiving.
If a report is not issued in accordance with the Regulations the trustees can be fined. The fines are set out in Section 10 of the Pensions Act 1995, i.e. up to £5,000 for an individual trustee, and up to £50,000 for a corporate trustee.
The exercise for OPRA to determine the date of commencement of winding-up of each Scheme and send out reminders shortly before the due date would be immense. To overcome this time consuming exercise OPRA have issued details to all its known winding-up schemes of the necessity to comply with the regulations (together with a form to complete). However, they have not included any details of the appropriate time scales and in this way they hope to get a lot of reports in early and address any problem cases which come to light.
An OPRA Note on wind-ups is likely to be issued in the near future.
Note - the new requirements were introduced under Section 72A of the Pensions Act 1995 as introduced by the Child Support, Pensions and Social Security Act 2000 and detailed in the Occupational Pension Schemes (Winding Up Notices and Reports etc) Regulations 2002
Alan Cottle, June 2002.