Pension Trustee Advice

Pension Trustee Advice

Trustees and managers of pension schemes need to be aware that they have many pension trustee duties under both earmarking and sharing rules.

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There are continual rules changes that HMRC introduce that you need to be kept up to date with and indeed amend scheme rules where necessary.

If you would like our pension trustee advice as to your exact duties please contact us.

1. Divorce, Pensions Trustee Duties

It is normal for the trustees of a pension scheme to only have to supply one statement of the cash equivalent value of a members pension benefits per annum.  However, within divorce regulations they are required to produce at least one more pension benefits statement should the member request a copy of one for divorce proceedings.

Within this valuation, the trustees are required to identify the proportion of the cash equivalent transfer value that is relevant to spouses benefits.

Another duty of the trustees is they are required to normally produce information requested within one month and within three months to produce a cash equivalent valuation.  The cash equivalent valuation timescale can be reduced to less than six weeks if a court hearing date is set.

Trustees are not allowed to charge for the production of one cash equivalent benefits value statement.  They are required to produce one free per annum.  If however, somebody has already had a cash equivalent statement and then requests a subsequent one due to divorce negotiations, they are not allowed to refuse to produce one but they are allowed to charge for it.

Trustees of the pension scheme are also allowed to charge for any additional work to calculate a cash equivalent proportion of a spouses pension as well as any costs involved in administering an order.

Whilst the summary of trustee duties set out in pensions earmarking for trustees or pensions sharing for trustees are not designed to be exhaustive they hopefully give an idea of some of things that you need to be aware of.

2. Divorce Pension Earmarking

Pension trustees are allowed to ask for further information about an order or indeed to query or dispute it and to be represented at a court hearing.  Generally, pension trustees have 14 days to query or dispute an order.

Trustees can only pay pension benefits across to a former spouse following divorce if specifically ordered to do so by court order.

Any normal spouses pension benefits on death of the member are not paid to the former spouse under an earmarking order unless it is detailed specifically in the trust deed and rules of the pension scheme.

An order will be served on the trustees of a pension scheme by the former spouse.  The courts issue an order to the former spouse which can then be served by the former spouse on the trustees of the pension scheme.

3. Pension Sharing Trustees

When a pension sharing order is served on the trustees of a pension scheme they must take action within 21 days of receiving the pension sharing order.

The trustees must either:

• Confirm receipt and implementation of the pension sharing order or
• Confirm receipt and explain that they are unable to proceed and give exact reasons as to why they are unable to proceed with the pension sharing order or
• Request payments for any additional costs in meeting the pension sharing order (these must be advised before any work has been undertaken)

Once payment has been received for additional costs or any other disputes are resolved, the trustees have four months to implement the pension sharing order.  If trustees do not comply with the pension sharing order within the above timescales then they are liable to financial penalties levied by the Occupational Pensions Regulatory Authority (OPRA).

Any charges involved in implementing the pension sharing order can be paid for separately or by deduction from the members pensions fund.

Amendments to pension scheme rules

Any new pension schemes that were set up after 10 May, 2000 must have had the rules incorporated to cope with pension sharing.

Existing pension schemes do not have to update their rules straight away but do have to do so at their earliest convenience or when the next change or review of scheme rules is made.

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