16 September 2010
Issue
Section 251 of the Pensions Act 2004
provides that a repayment of surplus may be made to a sponsoring
employer only if the trustees pass a resolution by 6 April 2011
latest to preserve a pre-existing scheme power to make such
payment. If this is not done, the power may be lost for good.
Whilst very few schemes are presently in surplus this may not
necessarily be the case in the future.
Practical steps
To pass the resolution the
following steps would be required:
1. The trustees would need to be satisfied that passing the resolution would be in the best interests of scheme members.
2. The trustees would need to provide 3 months' notice to the members of their intention to pass the resolution explaining that they are preserving a power in the rules.
3. The trustees would also need to send written notice to the sponsoring employer of their intention to pass the resolution.
4. On expiry of the 3 months' notice period the trustees would be able to pass the resolution to preserve the power.
When
The law requires any resolution to
preserve the surplus return power to be entered into by 5 April
2011. The Trustees would, however, need to provide 3 months’ notice
to the members of their intention to pass the resolution meaning
that notice would have to be given by 4 January 2011.
If you have any queries regarding this update or matters generally then please contact me.
- Telephone
- +44 (0) 161 817 7322
- andrew.ashleytaylor@hilldickinson.com
Hill Dickinson has a wealth of experience in dealing with the full
range of employment and pensions issues. If you have any queries
relating to the above, or any other legal matter, please do not
hesitate to contact us
for advice.
