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Pensions

Overview
Gallagher, David - Fieldfisher LLP
Overview
There are three main types of pension arrangements for employers: group personal pension schemes, occupational pension schemes and stakeholder pension schemes. These arrangements provide two main types of pension benefit: defined benefits and money purchase benefits. These benefits are provided either as part of a trust based arrangement or through contract.
 
A pension is a tax efficient form of remuneration for both the employer and employee. However, the regulations surrounding pensions are complex and laid down by various regulatory bodies, including HMRC, the Department for Work and Pensions and the Financial Conduct Authority.
 
Automatic enrolment obligations are being introduced for different employers at different times. The largest employers were subject to these obligations first and the smallest employers and new employers will be subject to these obligations last.

Key points 

  • Employers must enrol workers in a pension scheme and contribute to it.
  • The employer must include a statement regarding access to a pension scheme in the employment contract. 
  • If an employer with at least 50 employees makes certain changes to its pension arrangement it may be required to undergo a minimum period of consultation.
  • The employer must monitor and record pension contributions. All contributions must be paid by the legal due date.
  • The engagement terms of pension advisors should be documented. 
  • An organisation should offer employees general information about the pension but not advice.
  • Employers should carefully draft any announcement that details employer pension contributions, and reserve the right to change the terms on which contributions are made.
Queen's speech 2019 promises increased oversight

On 14 October 2019, whilst opening a new session of Parliament, the Queen confirmed that new laws will be introduced to 'provide greater powers to tackle irresponsible management of private pension schemes'. 

This will mean an enhancement of the powers afforded to the Pensions Regulator, so it will be able to respond earlier if organisations are not taking their pension enrolment responsibilities seriously.  

it is not yet known when any of these new laws will come into force.