We reported in our Summer Review that, due to an ambiguity in legislation8, trustees of occupational pension schemes need to pass a resolution before 6 April 2011 if they wish to retain existing powers in their scheme rules to allow payments to the employer (including the repayment of surplus to an employer either whilst the scheme is ongoing or potentially even upon a future wind-up).

As a result of concerns raised by the pensions industry, the DWP issued a letter on 14 October 2010 acknowledging the uncertainty about the scope of the legislation and stating that it was not the Government’s intention that this legislation should extend to schemes which are winding up, to money purchase schemes9 or to routine administrative payments. The DWP proposes to clarify the legislation and to extend the deadline for passing a resolution to 6 April 2016. This is good news in theory but the DWP’s plans to amend legislation “when a suitable opportunity arises” still leave the concern that if trustees do not pass a resolution before 6 April 2011, having first provided at least three months’ notice to members of their intention to do so, they may not have the power to make any payments to employers after this date. The safest course of action, in our view, is to continue the process of passing a resolution.  

Agenda item 2 – Trustees should continue with plans to pass a resolution before 6 April 2011, having first provided at least three months’ notice to members.