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The Pensions Regulator

Codes of practice

Codes of practice

Code of practice 05
Reporting late payment of contributions to occupational money purchase schemes

The code of practice

In this code of practice, references to the law that applies in Great Britain should be taken to include corresponding legislation in Northern Ireland; an annex lists the corresponding references.

Purpose of this code of practice

  1. The purpose of this code of practice is to give guidelines to trustees of occupational money purchase schemes on reporting the late payment of contributions to the Pensions Regulator and to members. Trustees are only required to report late payment of contributions where the late payment is likely to be of material significance to the Pensions Regulator. The code provides examples of when trustees should or should not report.

To whom is this code directed?

  1. The code is directed at trustees of those occupational money purchase pension schemes which are required to prepare and maintain a payment schedule.1

Terminology

  1. As the majority of occupational money purchase schemes are run by trustees rather than managers, 'trustees' is used throughout this document, but references to 'trustees' also include managers of schemes not set up under trust.
  2. The legislation requires trustees to make reports of late payments which are likely to be of material significance to the Pensions Regulator in the exercise of its functions. In this document, these payments are referred to as 'material' or 'material late payments'.
  3. The term 'late payment' describes circumstances where:
    1. the payment is not received at all;
    2. the payment is received but not on time; or
    3. the payment is not received in full.

    Payments higher than expected but received on time are not late payments.

  1. References to 'member contributions' are to contributions the employer deducts from a member's pay.
  2. References to 'days' mean all days. References to 'working days' do not include Saturdays, Sundays or bank holidays.

Reporting late payments: the legal requirement

  1. Trustees must 2 report to the Pensions Regulator and members within a reasonable period after the due date (see 9 below) if:
    1. member contributions and/or employer contributions are not paid on time; and
    2. the trustees have reasonable cause to believe that the late payment of contributions is material.
  2. Employers must make payments so that the trustees receive:
    1. all the pension contributions due to the scheme on, or before, the date(s) specified in the payment schedule;
    2. members' pension contributions within 19 days from the end of the calendar month when they were deducted from pay.
  3. Trustees are not required to include additional voluntary contributions (AVCs) in the payment schedule, but, if they do include AVCs in that schedule, they must report material late payments of AVCs in the same way as any other contributions.

1 The Occupational Pension Schemes (Scheme Administration) Regulations 1996 (Statutory Instrument 1996/1715) as amended.
2 Sections 49 and 88, Pensions Act 1995, as amended by section 269, Pensions Act 2004.