The Pensions Regulator

The employer role

Providing information to the Pensions Regulator
Working with trustees
Contributions
Scheme money
Paying levies
Amending your scheme
Winding up

Providing information to the Pensions Regulator

In order to identify and reduce the risk to members' benefits, the Pensions Regulator requires a range of information about pension schemes and employers.

These are our main sources of information:

The scheme return

All schemes are required to complete a regular scheme return.

This provides us with a wide range of information about schemes, including details of membership, sponsoring employers, trustees, advisers, administration, funding and investment.

As an employer, you need to ensure that trustees have sufficient information about your company to be able to provide up-to-date, accurate details to the regulator.

You must continue to provide the trustees and their advisers with any information they reasonably need to carry out their duties.

Reporting

Where a breach of the law happens, and it is likely to be materially significant to the regulator, employers and others involved in running the scheme will have a legal duty to report the breach to us.

We have issued a code of practice on reporting breaches.

Notifiable events

You have to tell us without delay about certain 'notifiable' events.

These are specific events which are likely to have a major impact on the security of members' benefits. Employers must notify us of 'employer-related' events – for example, a decision to seek to compromise a debt owed to a scheme.

Trustees must notify us of 'scheme-related' events, such as a significant reduction in scheme membership.

We have issued a code of practice on notifiable events.

Working with trustees

As an employer, you will need to liaise with trustees in a number of areas. Some of the most important aspects of the employer/trustee relationship are described below.

You may also want to take a look at our Guidance for trustees as a useful explanation of the trustee role. And you can find out more about working with trustees in the Trustee toolkit (our free e-learning programme).

Training and support

Where scheme trustees are also your employees, you must give them sufficient paid time off during working hours to:

• carry out their duties as trustees; and
• undertake trustee training.

Trustees must be able to demonstrate that they have the knowledge and understanding required to carry out their role effectively. This may impact on the amount of support and training trustees will need.

Funding

Most schemes that provide any defined benefits need to meet a statutory funding objective, which assesses the required levels of funding for a scheme (this replaces the minimum funding requirement).

As an employer, you will need to work closely with trustees to ensure that your scheme meets these funding requirements.

In particular, you will have to agree with the trustees:

• a statement of funding principles; and
• a schedule of contributions consistent with these principles.

Where the statutory funding objective is not met, you have to agree on a recovery plan setting out the steps that will be taken to put things right.

We have issued a code of practice on funding defined benefits.

Member-nominated trustees

Trustees are required to ensure that arrangements are in place, and implemented, that provide for at least one-third of trustees, or at least one-third of directors of the trustee company, to be member-nominated.

Employers are no longer able to 'opt out' of the requirements for MNTs and MNDs. Although an opt-out in place on 5 April 2006 can remain in place until the earlier of:

• the date members' approval of the opt-out ceases;
• the date the trustees or employer bring the opt-out to an end;
• 31 October 2007.

Until the opt-out ends trustee arrangements are governed by the terms of the opt-out. So if, for example, a trustee resigns, the trustee is replaced under the terms provided for in the opt-out.

Once the opt-out ends the new requirements will apply to a scheme from that date.

Employers must give their consent if the proportion of MNTs or MNDs is to be greater than one-third and the rules of the scheme do not provide for it.

Employers will also need to decide whether they will require their consent to be given for non-members to be selected as MNTs or MNDs.

The guidance for trustees tells you more about the responsibilities of trustees in putting arrangements in place.

Making changes to the scheme

If you're considering making changes to the pension scheme, there are some factors that you must discuss with the trustees: see amending your scheme for details.

Contributions

As an employer, you must:

• pay employees' contributions to the scheme within 19 days from the end of the month in which they were deducted from pay; and
• pay your own contributions in line with the schedule of contributions.

If you fail to pay contributions as described above, and the failure is likely to be materially significant, the Pensions Regulator will expect to receive a report from the trustees or scheme managers.

If overdue contributions have still not been paid 60 days after the due date, trustees or managers will need to inform scheme members.

We have issued codes of practice and guidance on reporting late payment and non-payment of contributions.

Scheme money

Pension scheme money must be kept in a trustee bank account separate from the employer's account.

Money can also be held, by someone other than the employer, in a suitable account on behalf of the trustees.

Employers who pay pensions to members on behalf of the trustees must place the money in a separate bank account if it is not paid to the member within two days of the employer receiving it.

Paying levies

All registered pension schemes pay a levy to fund the Pensions Regulator.

Schemes that are eligible for the Fraud Compensation Fund must also pay a fraud compensation levy as and when necessary.

Most schemes that provide any defined benefit pension arrangements must pay a levy to a compensation scheme called the Pension Protection Fund.

Amending your scheme

If you're considering amending the provisions of your scheme, you should be aware of certain changes to the law (contained in the Pensions Act 2004), which came into effect in April 2006.

You'll need to:

• take into account – in consultation with trustees – the requirements about altering pension rights already earned by members; and 
• consult scheme members if you're considering changes that might affect their future pension rights.

Winding up

If a pension scheme providing any defined benefits starts to wind up while an employer is still solvent, the value of members' benefits must be calculated using the cost of buying annuities to secure those benefits.

If the scheme's funds are insufficient to secure benefits on this basis, the shortfall is treated as a debt due from the employer to the trustees.

As an employer, you must ensure that you are aware of the measures introduced in the Pensions Act 2004 that prevent employers from taking action to avoid their liabilities in these circumstances.

Take a look at a summary of our powers, including our powers to act against avoidance of pensions obligations.