Term
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Definition
Chapter looks at methods of amending and explains the possible contraints on such amendments Amendments achieved by: Express power of amendment in TDR (must ensure it doesn't infringe s67 of PA95) Court Order Overriding legislation statutory power (s68 PA95) Modification Order issued by PR
Goes to heart of relationship between trustees and employer - "balance of power" amendment must be done in accordance with that power otherwise it is void and of no effect Example: attempt to amend by sending member announcement without formally documenting it in rules
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Term
Express Power of Amendment Initial notes (2) What will the power of amendment within the Trust Deed state? (4) |
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Definition
Who has the power How (resolution, deed,etc) - may give power to operate scheme on basis of announcements made to members until it's formally incorporated into trust deed Requirement to consult with or take professional advice from third parties Extent of retrospective effect
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Term
| Amending by Resolution as part of the Express Power of Amendment |
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Definition
Power of amendment will state whether employer or trustees have power vested solely in employer: board of directors will make resolution usually trustee Decisions recorded will be made unanimously or be majority as specified in trust deed Advantage: quicker and less costly to prepare Disadvantage: seen as less formal
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Term
| Advantage of amending by deed |
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Definition
| More formal and as a result is likely to be kept more carefully than a resolution |
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Term
| What are the common restrictions found in older trust deeds in relation to the power of amendment? (3) |
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Definition
Main Purpose of the Scheme - namely provision of benefits Payment of monies to the Employer Predujice Accrued Benefits
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Term
| Main Purpose of the Scheme notes |
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Definition
may be wider by including particular employer When to consider the main purpose of the scheme: admission of associated/subsidiary companies substitution of principal employer result of these could flood the scheme with new members of a different employer, thus the main purpose of the scheme can no longer be said to be the provision of benefits for the employer named in the restriction
Courage Group's Pension Scheme (1986)
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Term
| Payment of Monies to Employer notes |
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Definition
Seeks to protect fund monies for beneficiaries When DB schemes were often in surplus it caused problems - pre A-Day there was a requirement for a surplus to be reduced May also cause problems when there's a surplus at wind up
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Term
| Changes to accrued rights notes |
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Definition
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Term
| Section 67 fo the Pensions act 1995 (5) |
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Definition
"subsisting rights provisions" of PA95 Not possible to make a 'regulated modification' unless various conditions are met. A 'protected modification' subsisting rights replaced with MP benefits - witten member consent required A 'detrimental modification' subsisting rights may be adversely affected in any other way - written member consent or advance notice requried.
Neither kind of modification can be made without trustee consent, which they can only give with member consent or actuarial certificate. Civil penalties can be imposed for breach of Section 67.
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Term
| Where it would not otherwise be possible to amend the provisions of a trust deed, the courts can amend in what circumstances? (3) |
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Definition
Where trustees don't have the necessary investment or admin powers to deal in some particualr way with the trust property. Where the beneficiaries wish to get an amendment approved Where the trustees/employer/beneficiaries want the court to exercise its power to vary trusts.
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Term
What is Overriding Legislation? Do the scheme rules need to be changed to reflect legislation? Examples of provisions that have been overriden (3) |
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Definition
The application of statutory requirements to pension schemes by means of provisions which directly override scheme rules. No but seen as good practice to do so. |
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Term
| When a new employer joins a scheme, it usually authorises the principal employer to carry out activities and make decisions on its behalf. What will the authorisation ususally cover? (3) |
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Definition
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Term
| What is a Deed of Substitution? |
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Definition
Where a new principal employer is substituted for the old one. All three parties enter into an agreement for the new employer to take on the powers, duties and discretions of the old employer from a specified date. New employer may also be indemnified in respect of any actions taken by the old principal employer.
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Term
| What regulations require trustees to keep members informed by way of an annual report? |
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Definition
| The Occupational Pension Schemes (Disclosure of Information) Regulations 1996 |
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Term
| What information must the annual report broadly contain? (14) |
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Definition
Names of trustees Scheme provisions regarding appointment of trustees Names of professional advisors Address for enquiries Number of member Increases applied during last year (DB only) Basis for transfer values Whether audited accounts are required Reasons for any qualifications to the accounts and whether these have been resolved. Investment manager Statement of Investment Principles Review of investements and investment performance Copy of any statement made on the resignation or removal of auditor/actuary Details' of any employer-related investments.
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