Four codes of practice come into effect

Four codes of practice from the Pensions Regulator are now in effect, including the code on trustee knowledge and understanding.

This code sets out practical guidance for trustees on how they can comply with new requirements under the Pensions Act 2004 - that trustees of occupational schemes are conversant with their own scheme documents and have appropriate knowledge and understanding of trusts and pensions law and of the principles of funding and investment. The requirements came into force in April 2006.

Existing pension scheme trustees will have six months in which to acquire the relevant level of knowledge and understanding. New trustees will have six months from the date of their appointment.

The code of practice on trustee knowledge and understanding is available on the regulator's website along with the Scope, a checklist of the topic areas which trustees need to know and understand.

The Pensions Regulator has developed the Trustee toolkit, an e-learning programme, to provide trustees with free and relevant learning and help them to meet the new requirements. For immediate registration visit: http://www.trusteetoolkit.com/

The Early Leavers - reasonable periods code of practice is also now in effect. The code outlines the rights, relating to new provisions introduced in April 2006, of members leaving occupational pension schemes early (not upon death or normal retirement):

• with more than three months, but less than two years' pensionable service; and
• without vested rights to benefits under the scheme;

to take a cash transfer sum or a refund of their contributions. It also explains the duties trustees and pension scheme managers will have under the new legislation to notify members of their rights, and to facilitate their chosen option.

Two codes of practice Reporting late payments of contributions to occupational money purchase schemes and Reporting late payments of contributions to personal pensions have also come into effect.

The regulations on late payments are effective from April 2006. The codes of practice give guidelines about reporting to the regulator and to members the late payment of contributions.

They also clarify the obligations of trustees and pension scheme managers to report to the regulator the late payment of contributions into the pension scheme. They only need to do this where it is likely to be of material significance. Examples of when late payments should and should not be reported are provided in the codes.

All four codes of practice can be found on http://www.thepensionsregulator.gov.uk/doc-library/codes.aspx.

1. The four codes of practice came into force on 30 May, 2006.
2. For further information on the regulator's codes of practice visit: www.thepensionsregulator.gov.uk
3. Codes of practice are not statements of the law and there is no penalty for failing to comply with them. However, the codes do have legal status and they must be taken into consideration by a court or tribunal if they are relevant to what is being decided.
4. The Pensions Regulator is the regulator of work-based pensions in the UK, with wide ranging and flexible powers under the Pensions Act 2004.
5. The powers of the Pensions Regulator include the ability to:
   • collect more detailed scheme information;
   • issue improvement notices and third party notices, enabling the regulator to ensure problems are put right;
   • freeze a scheme that is at risk, while the regulator investigates; and
   • prohibit trustees who are judged not fit and proper to carry out their duties.
   • The Pensions Act 2004 also imposes a statutory obligation on 'whistleblowers' to report suspected breaches of the legislation to the regulator.

• Andrew Winstone 01273 627752
• Amy Balchin 01273 627207
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• amediarelations@thepensionsregulator.gov.uk
• http://www.thepensionsregulator.gov.uk/

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