Long Awaited Pensions Schemes Bill Published
The long-awaited Pension Schemes Bill was published on 16 October, detailing amongst other issues the proposed framework for collective defined contribution, new powers and sanctions for The Pensions Regulator and enabling provisions for Pension Dashboards.
It also amends the 2004 Pensions Act provisions on scheme funding, requiring trustees to establish and maintain a 'funding and investment strategy'. In respect of the long-term funding objective, trustees will be required to have a documented strategy for ensuring that enduring pensions and other benefits under the scheme can be provided. This strategy will need to specify the intended funding level at specified future dates and the investments the trustees intend to hold.
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Share Buybacks - Proceed with caution!
An in-specie contribution is a viable alternative to transferring cash into a pension scheme, and can include assets such as property or shares. Dangers can arise where the shares held in the pension scheme are bought back by the company for cash.
Private limited companies can make use of a mechanism under the Companies Act 2006 (the "Act") to buy back their own shares (whether for cancellation or to be held in 'treasury') to provide an exit strategy for a shareholder leaving the business or to return value to one or more shareholders, in this instance the pension scheme.
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