If you’re not an expert in pensions – and few IPs are – then tackling the pensions issues in an insolvency case can be a daunting prospect. But miss a detail or a deadline, and the Pension Protection Fund (PPF) can report you to your Recognised Professional Body (RPB) or even remove you from the appointment.
So it’s vital to make sure staff are well trained and know exactly what steps to take (or to use external specialists).
This article on how to find pension scheme details is the first in a series introducing you to the various issues around managing pension schemes in insolvency.
You need both to identify every pension scheme in place and to establish the key facts about each.
Almost any company that operates PAYE should by law have introduced a pension scheme to meet auto-enrolment requirements. Many companies will also have schemes that pre-date auto-enrolment. It’s not unusual for a mish-mash of schemes to have been introduced over the years.
As a result, different employees may have different arrangements, either within the same scheme or through different schemes. To add to the complications, some employees may have more than one pension through the company. And a scheme may have been taken over by a different provider since it was first introduced.
Key facts to establish about each scheme include:
Whether the scheme includes multiple arrangements
Whether any advisors helped set up or run the scheme
Whether the scheme was registered specifically for auto-enrolment
If an auto-enrolment scheme, which people were counted as workers, and which (if any) chose not to join
Whether the Pensions Regulator has issued any notices
What the scheme type or types is/are – final salary, money purchase, group personal pension for example
Who the trustees are (where relevant)
When it comes to pension arrangements, there’s no shortage of sources of information. The problem is that it’s rare for a single source to provide the complete picture. This means it’s important to allow adequate time and resources for digging.
Useful sources of information include:
The firm’s directors should be able to give you at least some of the information. But you can’t rely on them for a comprehensive response.
Each set of company accounts should show the amounts paid into pension schemes and state whether each scheme is defined contribution or defined benefit. Unfortunately, formal accounts don’t always give any further useful details – such as scheme name.
If a there is a defined benefit scheme, the accounts should include the scheme’s funding position plus the main actuarial assumptions.
Where payroll records include pension deductions, this indicates that at least one pension scheme exists. Payroll records won’t, though, tell you what the scheme is. It’s also worth being aware that there’s no guarantee that an employer who is deducting pension contributions is in fact passing them on to a pension provider.
For every live scheme, there should be regular payments going out to the pension provider. Check bank accounts for familiar pension provider names, such as the larger auto-enrolment pension providers Now:Pensions, The People’s Pension, and NEST.
Pensions typically generate large amounts of paperwork. There’s a good chance you’ll find a treasure trove of pension papers tucked away in a filing cabinet or desk drawer. It’s also worth checking documentation such as Board or management committee meetings.
Many employees will be able to provide details of pension schemes they have been enrolled in. Others, however, won’t have engaged in the pension arrangements being made for them. It’s also not uncommon for employees to be confused.
Not only are pensions complicated in themselves, but many people have been involved in multiple schemes, changes to scheme arrangements, or both. On top of that, some smaller employers struggle to understand pension issues. This means both administration and employee communication can be poor.
The Pension Protection Fund’s online S120 notification service includes a search facility for companies taking part in occupational pension schemes. Don’t assume, though, that this will give you full information. First, the system can be tricky to use – for example, it will only bring up exact matches for search queries. Second, it’s limited in what it covers. It doesn’t include group personal pension schemes or schemes with less than two members registered correctly, and often doesn’t bring up master-trust arrangements (which include many of the auto-enrolment providers).
With the client’s permission, you can search online for details of workplace pension schemes using the DWP’s pensions dashboard. The database is, however, not yet complete. It will be at least another three or four years before every pension scheme is listed.
It’s crucial to keep records of all your enquiries, even where you found nothing. These records are the proof that you have undertaken a comprehensive search. You may need to provide them as evidence – for example, during an RPB inspection.
We can help if you’re short on time or pensions expertise, or you’re concerned that your pensions work isn’t getting the priority it needs. See our ERA Pensions page for details.
