As mentioned in our November 2010 edition, the DWP had announced that s251 Pensions Act 2004 would be amended to remove the ambiguities which had been causing concern within the pensions industry and to extend the deadline for trustees to pass a resolution.
The draft amendments to s251 have now been published (in the new Pensions Bill, which is currently working its way through Parliament). The draft amendments are in line with the DWP announcement and include:
- giving trustees until 6 April 2016 to pass a s251 resolution (trustees who have already passed a s251 resolution will, it seems, be given the chance to pass a new one).
- making it clear that s251 only affects scheme rules about payment of surplus to an employer while the scheme is continuing. In other words, s251 will not affect scheme rules about payments of surplus when a scheme is winding up, and will not affect scheme rules which allow the scheme to reimburse an employer for administrative expenses. But trustees who have not done so already will need to pass a s251 resolution before 6 April 2016 if they wish to maintain current rules allowing payment of surplus when the scheme is not winding up.
For some schemes this means that no further action will be required. The implications for your scheme will depend on the particular circumstances. Please get in touch with your usual contact in the Mayer Brown pensions team if you want to discuss the appropriate next steps.