There are a number of deadlines to meet in the coming months and also recent changes to be aware of ... is your pensions calendar up to date?
- Section 251 Resolution
If your scheme rules, before 6 April 2006, included a power for return of surplus funds to be paid to a participating employer whilst the scheme was on-going, that power lapsed on 6 April 2006. Transitional provisions were put in place allowing Trustees to pass a resolution to reserve this power (where it is in the members’ interests to do so). The transitional period ends in April 2016, and three months' notice must be provided to the members of the Scheme. Therefore, if a resolution has not yet been passed, action must be taken by no later than 5 January 2016.
- Short Service Refunds
Members who joined a defined contribution scheme on or after 1 October 2015 will acquire vested rights in the scheme after 30 days’ pensionable service, which may be maintained or transferred at the point which they may leave the scheme. This legislative change does not override scheme rules, so schemes may need to update references to eligibility requirements for short service refunds and reduce any opt-out period following contractual enrolment to 30 days. Administrators must ensure that refunds are not offered or paid except in appropriate cases, to avoid making unauthorised payments.
- Abolition of defined benefit contracting out
Schemes affected by the end of defined benefit contracting-out on 6 April 2016 should act soon if the scheme sponsor plans to offset the consequent increase in payroll costs, either by using a specific statutory power or via a scheme rule amendment.
- Annual and lifetime allowance changes for high earners
Changes to the annual and lifetime allowances will take effect from 6 April 2016. The annual allowance will be tapered away for earners with income (including employer pension contributions) in excess of £150,000. In addition, the lifetime allowance will be reduced to £1 million. Trustees should consider communicating with potentially affected members about the April 2016 changes to the annual and lifetime allowances. Scheme sponsors may wish to consider the impact these changes will have on their employees.