ANNEX E – OFFICIAL RECEIVER ACTING AS SOLE TRUSTEE OF PENSION SCHEME
1 Trustee functions – scope of this Annex
This Annex gives a overview of the actions that are most likely to be required of the official receiver when he/she is liquidator or trustee and when acting as the sole trustee of the pension scheme (as employer in the form of the office holder). For the reasons given in paragraph 61.96, it is extremely unlikely that the official receiver will ever be in this position and instead the Pensions Regulator should be encouraged to seek the appointment of an independent trustee, particularly in view of the potential for a conflict of interest (see paragraph 4).
Similarly, the duties described in this Annex will be carried out by the Pensions Protection Fund, if that organisation takes control of the pension scheme (see paragraph 61.101).
For clarification, therefore, the official receiver should not be concerned with the guidance in this Annex unless he/she is sole trustee of the pension scheme.
2 Establishing if official receiver is sole trustee
The official receiver ought to be able to establish if he/she is the sole trustee (as employer) from the documents obtained in the enquiries outlined at paragraph 61.83, particularly the trust deed.
3 Official receiver acting as pension trustee – possible conflict of interest
Apart from the administrative difficulties that the official receiver would encounter when acting as pension trustee, there is also the risk of a conflict of interest.
As explained in paragraph 61.98, the insolvent employer is entitled to any surplus pension funds following the winding-up of the scheme. Many pension scheme rules provide that the pension trustee has discretion over how these funds are utilised during the winding-up process (they may, for example, be used to pay enhanced benefits to members).
In the event that the official receiver was acting as both pension trustee and insolvency office holder, there would be an obvious conflict of interest over those funds.
4 Official receiver acting as pension trustee – priority action
Where the official receiver is the sole trustee of the pension scheme, the priority will be to seek the early winding-up of the scheme. Normally this may be effected by writing to the financial services company that is administering the scheme to request that it is wound up [note 1a]. Subject to scheme rules, the costs of the winding-up would be borne by the scheme.
If this is not possible, perhaps because there is no financial services company appointed, or the scheme rules do not allow winding-up to commence in that way, the official receiver should seek the guidance of Technical Section, as it is likely that legal/specialist advice will be required. Subject to the rules of the scheme, the costs of such advice are recoverable from the scheme and will not be an expense to the liquidation or bankruptcy estate [note 1] [note 2].
5 Transfer requests – background
A member of a pension scheme has the right to request the transfer of their pension benefits to another scheme [note 3] [note 4]. Such an event is particularly likely to occur during the winding-up of a pension scheme (see paragraph 61.78). The administration of this would fall to the pension trustee to deal with, and must generally be dealt with within six months of receipt [note 5].
6 Transfer request made to official receiver
Where a transfer request (see paragraph 5) is made to the official receiver as trustee of the scheme, or employer, he/she should agree to the transfer provide the following documents and information are obtained:
Provided that this request is satisfied, the official receiver can sign the necessary paperwork relating to the transfer without the benefit of further advice – though he/she may consult Technical Section if desired.
In the event that any of this is not able to be provided, the official receiver should seek the guidance of Technical Section, as it is likely that legal/specialist advice will be required. Subject to the rules of the scheme, the costs of such advice are recoverable from the scheme and will not be an expense to the liquidation or bankruptcy estate [note 1] [note 2].
7 Information to scheme members
The regulations relating to pension schemes require the trustees of a scheme to issue a Members’ Booklet and disclose various pieces of information to scheme members, including an annual report, audited accounts, an investment report for the scheme, a statement of investment principles and a schedule of contributions.
Assuming there is one appointed, the official receiver may request that the financial services company administering the pension deal with such matters. Subject to scheme rules, the costs of this would be borne by the scheme.
If this is not possible, perhaps because there is no financial services company appointed or the financial services company declines to act, the official receiver should seek the guidance of Technical Section, as it is likely that legal/specialist advice/assistance will be required. Subject to the rules of the scheme, the costs of such advice are recoverable from the scheme and will not be an expense to the liquidation or bankruptcy estate [note 1] [note 2].
Depending of the type of scheme, occupational pension schemes are required to appoint an auditor, an actuary and/or a fund manager.
An auditor is not required for schemes where all members are trustees (so this will be of no concern to the official receiver).
An actuary is not required for a money purchase scheme, and a fund manager is not required for wholly insured schemes.
Assuming there is one appointed, the official receiver may request that the financial services company administering the pension deal with such matters. Subject to scheme rules, the costs of this would be borne by the scheme.
If this is not possible, perhaps because there is no financial services company appointed or the financial services company declines to act, the official receiver should seek the guidance of Technical Section, as it is likely that legal/specialist advice/assistance will be required. Subject to the rules of the scheme, the costs of such advice are recoverable from the scheme and will not be an expense to the liquidation or bankruptcy estate [note 1] [note 2].
The trustees of an occupational pension scheme must ensure that arrangements are made and notified to members for resolving disputes about matters in relation to the scheme. The procedures must provide for a nominated person, on the application of a complainant to give a decision on such an agreement. The trustees are required, following a decision made by the nominated person, to reconsider the matter in question. Where the official receiver is sole trustee of the pension scheme, he/she may rely on the existing dispute resolution procedure.
Where there is no procedure in place, the official receiver may request that the financial services company administering the pension deal with such matters. Subject to scheme rules, the costs of this would be borne by the scheme.
If this is not possible, perhaps because there is no financial services company appointed or the financial services company declines to act, the official receiver should seek the guidance of Technical Section, as it is likely that legal/specialist advice/assistance will be required. Subject to the rules of the scheme, the costs of such advice are recoverable from the scheme and will not be an expense to the liquidation or bankruptcy estate [note 1] [note 2].
If it is necessary to contact a scheme member (to effect duties described in paragraph 7, for example), but it has not been possible to ascertain the member’s current address, the official receiver may use the Letter Forwarding Service operated by the Department for Work and Pensions.
Further information about this service is given in the following web-page:
http://www.dwp.gov.uk/other-specialists/bulk-letter-forwarding-service/