The Pensions Regulator has published "good practice guidelines" for trustees on avoiding
delays in winding up. The guidelines are an indication of what the Regulator would consider
reasonable – they do not provide advice on specific courses of action. The fact that trustees
have taken account of the guidance would not prevent the Regulator taking action where
unreasonable delays occur.
Key points include:
- schemes already in winding up should complete at least the key activities as soon as
possible and at least within 2 years. s
- chemes commencing winding up after publication of the guidance should complete key
activities within 2 years of commencing winding up.
- trustees should adopt a pragmatic and proportionate approach, whilst following scheme
rules, fiduciary duties and legislation.
- reconciling contracting out data should be among the first activity undertaken with early
contact with NISPI.
Good planning is the key to efficient winding up (and a plan is required where winding up during
a recovery period). Attached to the guidance is a chart outlining the main tasks and a suggested
Good communication and regular trustee meetings are important. There are statutory
disclosure/reporting requirements which are the minimum - it would be good practice to
consider more communication.
All is not lost if trustees cannot meet the two year deadline……. Where a scheme is subject to
unavoidable delay the trustees should contact the regulator and explain the issue.
Unavoidable delay might be:
- scheme specific legal issues requiring court action;
- industry wide legal issue subject to court action;
- when early wind up is not in the members' best interests (for example early redemption
charges on an investment);
- when further distributions in the employer's insolvency are expected;
- where there is an outstanding member complaint with the Pensions Ombudsman.
However the Regulator does say that it will not often be appropriate to go beyond two years.