If you're thinking of winding up your company's pension scheme, it's essential to seek advice. Our expert lawyers will guide you through the process.
Winding up Pension Schemes
We have special expertise in winding up pension schemes of all types, including both final salary and money purchase schemes.
We advise employers and trustees on all steps to complete the winding-up, and highlight the major issues below.
Check the scheme rules to see:
- Who has power to trigger winding-up, usually the employer with the trustees’ consent
- Whether there are any notice requirements to the trustees
- Whether the trustees have power to defer winding-up
- How winding-up expenses are paid, ie by the scheme or the employer
- How any deficit is recovered
- How benefits are secured and whether the scheme rules need to be amended to facilitate winding-up
- How any surplus is applied
Trustees must secure members’ benefits in accordance with the scheme’s winding-up rule as supplemented by the statutory winding up priorities, usually by purchasing annuities from an insurance company or paying a transfer value. See also Buy-out and Buy-in.
The annuity can be taken out without the member’s consent provided the policy complies with legislation.
Trustees should obtain appropriate investment advice regarding selection of the insurance company.
Information to members
Within one month of winding-up beginning, the trustees are required to tell all members of that fact, the reasons why, and the name and address of a person to contact if the members have further enquiries.
On completion of the winding-up, the trustees are required to tell the members the amount of benefit secured for them, the applicable payment conditions and provisions for altering the benefit once it is in payment, and who is liable for paying those benefits. This information must be given not later than three months after the benefits are secured.
Trustees and employers are obliged to keep written records regarding decisions about winding-up.
Why Choose Pitmans’Winding Up Pension Schemes Lawyers?
Pitmans' Winding Up Pension Schemes lawyers can;
- Advise on all legal aspects of the winding-up process
- Prepare or review member communications
- Negotiate annuity policy terms
- Draft deed of termination