The Pensions Regulator

Code of practice 10
Modification of subsisting rights

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Employer's responsibilities and the role of professional advisers

Employer's responsibilities

78. Even if, under scheme rules, the employer has sole power to make amendments and there is no requirement for trustee approval, sections 67 to 67I of the Pensions Act 1995, where they apply, override scheme rules⁴⁶ and must always be complied with.
79. This means no modification which adversely affects members' subsisting rights can be made by an employer (or anyone else with the power to amend):
    • without the approval of the trustees; and
    • unless the procedures set out in the Act are followed.

The role of professional advisers

80. When considering an amendment which will or might affect members' subsisting rights it is important for trustees to seek appropriate advice, in particular from legal and actuarial advisers, usually those already appointed to the scheme, at an early stage in the process.
81. Scheme administrators may also have a valuable role to play in advising on the practical implementation of any proposed changes to benefits, especially in relation to the time it will take to complete the implementation process.
82. Trustees should expect their professional advisers to alert them to any concerns they may have about a proposed modification and, depending upon the circumstances, the advisers (and the trustees) may need to consider making a report to the regulator.
83. There will usually be a need for the scheme's actuary to be involved in the modification process in order to:
    • advise the trustees of the effects of any proposed modification on the members, and of the effects of any alteration to a proposed modification; and
    • advise the trustees of the effect on the funding of the scheme of a proposed modification.
    There will always be a need for an actuary to:
    • provide any necessary actuarial equivalence statement
    if the actuarial equivalence route is being followed.

The Pension Regulator's powers

84. The regulator has the power to make an order declaring the extent to which a regulated modification is void.⁴⁷ The regulator also has the power to intervene to direct a person:
    • not to make a regulated modification⁴⁸;
    • to satisfy the consent requirements or the actuarial equivalent requirements;
    • to satisfy the approval requirements⁴⁹;
    • to satisfy the reporting requirements.

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