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Winding up Pension Schemes - the issues for Trustees

13 May 2003

                            The Issues for Trustees

The Issues for Trustees

• Powers and duties
• Sources of advice
•  To close scheme or wind up
• Funding levels
• Communication with members

Powers and Duties

• Trust deed and rules
• Legislation
• Case law
• Ombudsman 
• Discontinuance
• Wind up as a result of merger
• Insolvency
• Independent trustees

Source of Advice

• Actuary
• Lawyer
• Investment Adviser
• Administrator

To Close Scheme or Wind up

• Closure to new entrants
• Wind up may be automatic in deed
• Amendments
• Priority drift
• Size of scheme

Funding Levels 

Insolvent winding up

• MFR
• Debt on employer
• Annuity buy out costs
• Proportionate payment of benefits

Deemed Buyback

Conditions to be met

• Insolvent employer
• MFR funding below 100%
• Insufficient assets to buy outcontracted-out rights
• Actual TV less than MFR TV and less than technical amount
• Whole of actual TV paid to State
• Members informed written consent
• (Partially) restores benefits in State scheme

GMP Equalisation

• No consensus            

-how to equalise

• Cost of equalisation  

-can favour pensioners

• Insurers                       

-exclude Trustees' indemnity policy  

"Opposite sex" calculation Record quasi GMP

• Has characteristics of GMP
• Reduces excess over GMP
• Ranks with excess over GMP

Communications

• Vital
• Cannot be enough
• Better to broach bad news early
• Liaison committe 

OPRA Reporting

Pension Trusteeship

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