Pension Scheme

Discontinuance

Managing the Many defined benefit (DB) pension schemes are discontinuing.
This may be as a result of a voluntary wind-up or through an
transfer of liability employer insolvency event which can lead to transfer into the
away from scheme Pension Protection Fund (PPF).
trustees Wind up is complex and trustees should not underestimate the
magnitude of the tasks involved. Historically a wind up took
many years to finalise but now the Department for Work and
Pensions (DWP) and the Pensions Regulator (tPR) direct that
the key tasks should be completed within 2 years.

Equiniti specialist discontinuance

department offers an efficient service Why Equiniti?
to pension scheme trustees, and as part
of the PPF Specialist Administration • Scalable and proven discontinuance
Services Panel, to the UK government, services
to administer the transfer of legal liability
• One of the largest and longest
away from the trustees when the pension
standing pension specialists with a
scheme is approaching its end. The
strong presence in both public and
scheme liability will be transferred either
private sectors
to an insurance company or to the PPF.
• Commitment to excellent customer
We also undertake preparatory work, e.g.
service supported by modern
prior to full scheme wind-up, trustees
systems which encourage accuracy
may choose to check and improve the
and low risk
quality of member data held, to agree
their Guaranteed Minimum Pension (GMP) • Staff are enthusiastic experts
records with HM Revenue and Customs, who are passionate about
or to ensure equal treatment of male and service excellence
female members. In short, an insurance
• Offering pensions payroll expertise
company or the PPF will need to have
making payments to 2.3 million
members’ benefit figures specified clearly
pensioners and annuitants to a
and accurately, in order to take on the
value of £13 billion per annum in
responsibility, and this can and should
over 180 countries worldwide
start at the earliest possible opportunity.

On completion of Visteon UK Pension Plan Assessment Period

It was a fabulous experience working with the Stirling Paymaster
team who really understood what they were doing and showed
great commitment to get it done.
Chris Martin, Managing Director of Independent Trustee Services

equiniti.com
The challenges in winding-up schemes
within the 2 year time frame should not
be underestimated.
The complex inter-dependency of tasks
can lead to overrun in time and cost.
Trustees will wish to avoid any personal
liability and need to be satisfied that all
the required processes are complete
and member liabilities have been fully
discharged in line with the trust deed
and scheme rules.
Our approach to wind up is designed to
give maximum confidence to trustees
through diligent planning and execution.
Our wind up services include:
•R
 eview of scheme rules in advance
of a wind-up leading to draft rule
amendments
• Implementing a protocol between the
employer and trustees to deal with
common issues in advance
•D
 etailed wind-up project plan and
timetable for trustees
•M
 ember communication service
including the initial announcements,
member options exercises, data
validation by members themselves,
and member tracing
•D
 ata preparation such as member
reconciliation, GMP reconciliation and
GMP equalisation, (also popular as
standalone services, see below)
•S
 upport for buy-out exercises using
our template developed with leading
insurers to allow accurate quotations
and effective handover of administration
•D
 ealing with HMRC and the Pensions
Regulator to enable trustees to meet
their statutory requirements
Reconciliation of contracted-out
liabilities between trustees and HMRC
If a pension scheme is contracted-out
of the earnings-related part of the UK
State scheme, its members enjoy a lower
rate of national insurance deductions
through their company payroll. However,
in exchange for this the pension scheme
must provide a minimum level of
replacement benefit. For the period
1978-1997 this is referred to as
Guaranteed Minimum Pension (GMP).
Equiniti is the trading name of Paymaster (1836) Limited. Registered Office: Sutherland House, Russell Way, Crawley, West Sussex
RH10 1UH. Registered in England and Wales No. 3249700. Paymaster (1836) Limited is authorised and regulated by the UK Financial
Conduct Authority.
equiniti.com
It is common for the trustees’ records to Equiniti’s extensive experience of PPF
differ from HMRC’s, both with regard to assessment work has allowed us to
the level of GMP due to members and develop a market leading approach
which employees HMRC hold the trustees including:
liable to provide GMP.
• A flexible project plan
Before a pension scheme winds-up, any
• PPF assessment administration manual
anomalies must be dealt with in order that
HMRC can approve the contracting out • Conversion assessment engines which
arrangements of the scheme. guarantee the accuracy of calculations
whilst dramatically reducing unit times
GMP Reconciliation is available as a
to complete assessment tasks.
standalone service, for schemes that are
not yet winding-up. Contracting-out is • Member communication mediums
due to come to an end in 2016, and it may
• Automated creation of standard data
be the case that there is an unmanageable
interface files.
run on HMRC at that point, to agree
historic GMP records. In any case, this has Our processes are scalable to handle
always been a major reason for delay in schemes with thousands of members
scheme wind-ups, so many trustees are and our transition processes enable
opting to get it out of the way long in the smooth take-on of payroll and
advance of planned scheme wind-up. administration services.
Equalisation and GMP equalisation DataSure
Since the nineties, pension schemes Accurate data is essential for cost-
must provide equal benefits to their male effective buy outs, transfer to the
and female members. However, in some PPF and transfer to the FAS. The
cases, there are problems with the way Pension Regulator has emphasised
this was managed, with legal advisors the importance of high quality data
now suggesting that scheme trustees and issued new standards to help
re-visit members’ benefit calculations improve the accuracy of new and
before finally winding-up their scheme. legacy data.
The inequality of State provision has
DataSure produces ongoing reports
also had a knock-on effect to the GMP
to assess accordance with the Pension
element of members’ benefits within
Regulator’s guidelines. The process
company schemes, and the government
we have established helps trustees
are still consulting on the approach to
understand the quality of the data
be taken with regard to guidelines and
currently held, allowing them to better
possibly legislation requiring trustees to
assess and proactively plan how they
adjust benefits further for unequal GMPs
can address issues over the coming
between men and women.
months or years.
PPF assessment
Many independent trustees recognise the
challenge in completing PPF assessment
within a two year time scale and within
budget. In the past, trustees have often
relied on existing administrators to take
on the new additional specialist tasks and
this often leads to targets being missed
and cost overruns.
The Pension Protection Fund (PPF) have
introduced the Specialist Administration
Contact Equiniti to
Services Panel – a group of administrators find out more:
with the experience and capability Call 44 (0)1786 434 252 or email
to guide schemes through the PPF steve.nicholson@equiniti.com
assessment period. Equiniti have been
appointed to this panel.
1073_PSD04/15