22 October 2010
The Department for Work and Pensions (the "DWP") has confirmed that
the Government will amend section 251 of the Pensions Act 2004
which threatened to prevent repayments of surplus from a pension
scheme to a sponsoring employer unless a resolution was entered
into by 6 April 2011. The DWP has said it will issue proposals
shortly designed to "ensure that the provision operates in a
sensible and proportionate way".
The DWP intends to remove uncertainty concerning the scope of section 251 and to extend by five years the deadline for passing a resolution authorising repayment. The DWP has confirmed that it is not intended that section 251 applies to schemes in winding up which until now was not clear.
A DWP spokesperson said:
"A number of people believe that this provision shouldn’t apply to schemes that are winding up, to money purchase schemes (with the exception of a small category known as 'earmarked schemes'), or to any of the payments that are specifically exempted from section 37 of the Pensions Act 1995 (e.g. routine administrative payments). It's not the Government's intention that section 251 apply in these circumstances, and so we have committed to amending the provision in primary legislation at the next suitable opportunity. We intend to make it clear that section 251 does not apply to payments that would not themselves be subject to the overriding provision of section 37 of the Pensions Act 1995, and we also propose to extend the deadline for action by trustees by five years, to 6 April 2016."
The announcement provides some welcome clarification on this issue and we now await further details of the Government's proposals to amend section 251.
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