Training for Pension Trustees; from April 2006, the New Pensions Bill Will Mean Trustees Are Required to Have Knowledge and Understanding of the Law Relating to Trusts and Pension Schemes Generally Kalamazoo Workers Protest after the Collapse of Their Pension Scheme
With all the press coverage relating to pensions recently, one may be forgiven for thinking that pensions are to be simplified.
Certainly, with a raft of prospective legislation in the Finance Act 2004, the new funding legislation will have a major effect on pensions and allow for greater contribution levels, death in service levels and increased benefits at retirement. Things are looking good for the future of pensions.
However, one area of prospective legislation that may have slipped through the net during the recent furore over pensions is new trustee responsibilities under the Pensions Act 2004.
The collapse of the pension scheme operated by the insolvent Birmingham computer group Kalamazoo was one of the high profile cases that led to the new act.
In March last year, members of the company's pension scheme joined hundreds of other protesters lobbying for compensation at Westminster as MPs debated the bill.
This legislation is intended to safeguard pensions and prevent pensioners losing out on their pension schemes when companies become insolvent. But although it was created as part of the drive for simplicity as well as protection, it is adding complications that are too much to bear for smaller occupational pension schemes.
The Government intends to introduce the Pension Protection Fund (PPF) and various other various new amendments within the bill. There will be measures to ensure the proper functioning of the regulator's duty to protect the pension protection fund from abuse.
The post-1997 indexation requirements for defined contribution schemes is being removed and the amendments also include pensioners as well as active scheme members will be given a statutory role in the MNT process.
However, one of the largest impacts for smaller companies that operate occupational schemes is the requirement for knowledge and understanding.
From April 2006, the new pensions bill will mean trustees are required to have knowledge and understanding of the law relating to trusts and pension schemes generally.
Therefore the average trustee needs to know the concept of trust, fiduciary duties and be able to recognize conflicts of interest. Trustees are also expected to understand the legal ramifications involved with investment principles and know the key provisions of the 1993 and 1995 Acts and the new pensions act.
They are also required to understand the relationship between pensions acts and trust law and related legislation in so for as it applies to the provision of pension benefits
These requirements apply not only to trustees of large defined benefit occupational schemes but also their counterparts offering small money purchase occupational schemes. …