Pensions Lawyer - Advice Required
Discussion
Is anyone on here an employment lawyer , with specialist knowledge is pensions?
This is with regards an employer who has chosen to close a defined benefits scheme after having issued a few years back what it described as a legal agreement to fund the scheme until 2017 ( in writting). employees were asked to make a choice to stay in or move from the scheme at this time, and this was a core part of the decision criteria.
I want to keep company excluded at this time, so no guessing pls, thanks
This is with regards an employer who has chosen to close a defined benefits scheme after having issued a few years back what it described as a legal agreement to fund the scheme until 2017 ( in writting). employees were asked to make a choice to stay in or move from the scheme at this time, and this was a core part of the decision criteria.
I want to keep company excluded at this time, so no guessing pls, thanks
SMB said:
Is anyone on here an employment lawyer , with specialist knowledge is pensions?
This is with regards an employer who has chosen to close a defined benefits scheme after having issued a few years back what it described as a legal agreement to fund the scheme until 2017 ( in writting). employees were asked to make a choice to stay in or move from the scheme at this time, and this was a core part of the decision criteria.
I want to keep company excluded at this time, so no guessing pls, thanks
Ask RichBurley, he does employment law, he should cover this.This is with regards an employer who has chosen to close a defined benefits scheme after having issued a few years back what it described as a legal agreement to fund the scheme until 2017 ( in writting). employees were asked to make a choice to stay in or move from the scheme at this time, and this was a core part of the decision criteria.
I want to keep company excluded at this time, so no guessing pls, thanks
Was this written agreement a recovery plan to fund a deficit? The recovery plan probably guarantees that the pension will be fully funded by the date you mention? It is a legal document, but can be overidden by future valuations.
A scheme will have a valuation every 3 years, the principle employer decides if the scheme is still viable based on these valuations. A scheme that was funded ok at the last valuation (or had a suitable recovery plan put in place), will not necessarily be ok at the next valuation and the employer may find that they are no longer in a position to maintain the scheme.
An employer can choose to terminate a pension scheme if they can not longer afford to run it. Your benefits will be deferred and what you have accrued to date will be paid at normal retirement age. Alternately, the employer can attempt to sell the plan to an insurance company who then take over the responsibility of providing you with a pension.
If you contract states that you have a right to the pension, then a consultation process has to be gone though, but the scheme will still end up closing.
A scheme will have a valuation every 3 years, the principle employer decides if the scheme is still viable based on these valuations. A scheme that was funded ok at the last valuation (or had a suitable recovery plan put in place), will not necessarily be ok at the next valuation and the employer may find that they are no longer in a position to maintain the scheme.
An employer can choose to terminate a pension scheme if they can not longer afford to run it. Your benefits will be deferred and what you have accrued to date will be paid at normal retirement age. Alternately, the employer can attempt to sell the plan to an insurance company who then take over the responsibility of providing you with a pension.
If you contract states that you have a right to the pension, then a consultation process has to be gone though, but the scheme will still end up closing.
Edited by Firefoot on Friday 10th July 12:49
Firefoot said:
Was this written agreement a recovery plan to fund a deficit? The recovery plan probably guarantees that the pension will be fully funded by the date you mention? It is a legal document, but can be overidden by future valuations.
A scheme will have a valuation every 3 years, the principle employer decides if the scheme is still viable based on these valuations. A scheme that was funded ok at the last valuation (or had a suitable recovery plan put in place), will not necessarily be ok at the next valuation and the employer may find that they are no longer in a position to maintain the scheme.
An employer can choose to terminate a pension scheme if they can not longer afford to run it. Your benefits will be deferred and what you have accrued to date will be paid at normal retirement age. Alternately, the employer can attempt to sell the plan to an insurance company who then take over the responsibility of providing you with a pension.
If you contract states that you have a right to the pension, then a consultation process has to be gone though, but the scheme will still end up closing.
The written agreement was to maintain the funding to the plan until 2017. Now despite the compnay having a pile of cash, they have declared it unaffordable ( cash is alot more than deficit as it stands today)A scheme will have a valuation every 3 years, the principle employer decides if the scheme is still viable based on these valuations. A scheme that was funded ok at the last valuation (or had a suitable recovery plan put in place), will not necessarily be ok at the next valuation and the employer may find that they are no longer in a position to maintain the scheme.
An employer can choose to terminate a pension scheme if they can not longer afford to run it. Your benefits will be deferred and what you have accrued to date will be paid at normal retirement age. Alternately, the employer can attempt to sell the plan to an insurance company who then take over the responsibility of providing you with a pension.
If you contract states that you have a right to the pension, then a consultation process has to be gone though, but the scheme will still end up closing.
Edited by Firefoot on Friday 10th July 12:49
Clearly a valuation in 2008/9 will be down, but should have some recovery by 2011/12 with stock market?
even if the written agreement is something they can get round, people feel they were deliberately misled by the misrepresentation of the guarantee to fund the scheme. Is this in effect misselling, to state this at the time and would it be something that would be covered under the financial ombudsman scheme?, thanks
I doubt you would get anywhere with this under any misselling laws.
Final salary pensions are in dire straights at the moment and there are a lot of associated running costs that the members don't tend to see. The investment managers are not returning the investment levels previous planned for, people are living longer, running costs are increasing etc.
Administration charges (a smallish scheme of 150 members may have admin fees of between 35k and 65k per year)
Most schemes have death in service cover so there is a premium for this
All schemes have to pay the pension protection levy
Then there is the administration fee for the pension protection levy
Audit fees
You get the picture
An example of a schemes costs could be as follows
Administration £55k
Audit fee £7.5k
PPF levy £88k
PPF admin charge £150
Group life cover £44k
So there is £190k of fees before the company pays over its standard pension contributions and deficit contributions.
A company could be committed to keeping their final salary scheme, arrange a 10 year recovery plan to fund the deficit, reach an agreement with employees regarding contribution levels, and then they get the latest valuation showing an increase of 7 million in their deficit, their assets have gone down, their liabilities have increased and then they get stung by a ridiculously large Pension Protection Levy invoice. You dont know what the levy will be for next year, the execs get nervous and next thing you know, the pension scheme is being scrapped.
It sucks, but it is happening all over.
Final salary pensions are in dire straights at the moment and there are a lot of associated running costs that the members don't tend to see. The investment managers are not returning the investment levels previous planned for, people are living longer, running costs are increasing etc.
Administration charges (a smallish scheme of 150 members may have admin fees of between 35k and 65k per year)
Most schemes have death in service cover so there is a premium for this
All schemes have to pay the pension protection levy
Then there is the administration fee for the pension protection levy
Audit fees
You get the picture
An example of a schemes costs could be as follows
Administration £55k
Audit fee £7.5k
PPF levy £88k
PPF admin charge £150
Group life cover £44k
So there is £190k of fees before the company pays over its standard pension contributions and deficit contributions.
A company could be committed to keeping their final salary scheme, arrange a 10 year recovery plan to fund the deficit, reach an agreement with employees regarding contribution levels, and then they get the latest valuation showing an increase of 7 million in their deficit, their assets have gone down, their liabilities have increased and then they get stung by a ridiculously large Pension Protection Levy invoice. You dont know what the levy will be for next year, the execs get nervous and next thing you know, the pension scheme is being scrapped.
It sucks, but it is happening all over.
Edited by Firefoot on Saturday 11th July 19:02
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