UK – OPRA, the UK occupational pensions regulatory authority has produced an updated publication about winding up defined benefit schemes aimed at trustees, advisers and insolvency practitioners.
The publication sets out OPRA’s views on issues that often arise in the course of winding up a final salary scheme. It covers the main areas that can cause delay to schemes that are winding up, such as: investment issues; minimum funding valuations; employer insolvency; scheme deficit.
Last April, the occupational pension schemes (Winding Up Notices and Reports) Regulations 2002 came into force, which gave OPRA a ‘monitoring’ role to ensure that trustees complete the winding-up of their schemes within a reasonable timescale.
Trustees now have to keep written records on the decision to wind up a scheme, and trustees of schemes that have been winding up for more than three years must now make a progress report to OPRA every year. It is this proactive relationship with schemes in wind-up, that has prompted an update to the guidelines, says OPRA.
The issue of insolvent companies winding up schemes and leaving employers without a pension is one that has been in UK newspaper headlines over the past twelve months. The UK government announced in its green paper on pensions proposals that it would be introducing a Pensions Protection Fund into which all schemes would pay a premium.
The PPF will then pay out a certain amount to employees in case of insolvency and loss of pension. A spokeswoman at OPRA said that it was worthwhile and would hopefully address the issue of people losing large amounts of money.