TPAS - The Pensions Advisory Service

Disclosure of Information

The 1995 Pensions Act requires pension schemes to provide their members with:

• basic information about the scheme
• information about their rights and benefits when requested
• statements of benefits and access to regular reports about the scheme.

Basic Information

Basic scheme information should be provided automatically to prospective occupational scheme members within 2 months of joining the scheme.

Existing members, their spouses, beneficiaries and trade union representatives can request such information and this should be made available to them within 2 months of being requested.

The following are the main items of basic information to be supplied to members of occupational schemes.

• The categories of people who are eligible for membership.
• Whether membership is by application or whether entry is automatic (unless the person elects not to join) or is subject to the employer's consent.
• The eligibility conditions.
• The period of notice required (if any) if a member wants to end their pensionable service.
• Whether a member whose pensionable service has ended before Normal Pension Age (NPA) may re-enter the scheme and, if so, any conditions that apply.
• How members' normal contributions (if any) and the employer's contributions are calculated.
• What arrangements exist for members to pay AVCs (this could include the investment funds available and levels of contributions that may be paid).
• Whether the scheme has tax approval or, if not, whether the Inland Revenue is considering an application for tax approval.
• Which employments covered by the scheme are, and which are not, contracted-out and the basis for contracting-out.
• The scheme NPA.
• What benefits are payable and how they are calculated, including the definition of pensionable earnings and the scheme accrual rate.
• Whether the scheme rules contain a power to increase pensions in payment (other than on a statutory basis) and if so, what it is, who may exercise it and whether, and to what extent, it is discretionary.
• Whether survivors' benefits are payable and, if so, the conditions (if any) attaching.
• For benefits other than survivors' benefits, the conditions for paying the benefits.
• Which benefits, if any, are discretionary.
• The name of the legislation (if any) which sets up the scheme and determines its benefits (this would apply to some public service schemes).
• For members whose pensionable service ends before NPA, the arrangements made, and in what circumstances, for:
• Estimates of cash equivalents
• Statements of entitlement to a guaranteed cash equivalent
• Preserved benefits or transfers
• Refunds of contributions
• Whether, and in what circumstances, the trustees will accept cash equivalents and provide transfer credits and whether acceptance is at the trustees' discretion.
• Where the trustees have directed that Cash Equivalents will not take account of discretionary benefits, a statement to this effect.
• A summary of how transfer values are calculated.
• A statement that the Scheme Annual Report and Audited Accounts are available on request (not required for certain public service schemes).
• Whether information about the scheme has been given to the Registrar of Occupational and Personal Pension Schemes.
• Details of the scheme's Internal Dispute Resolution procedure (unless the scheme is exempted from having a procedure) and the address and job title of the person to be contacted to use the procedure.
• A statement that The Pensions Advisory Service is available at any time to assist members and beneficiaries with any pension scheme query they may have.
• A statement that the Pensions Ombudsman may investigate and determine any complaint or dispute of fact or law in relation to an occupational pension scheme, giving a contact address.
• A statement that the Pensions Regulator is able to intervene in the running of schemes where trustees, employers or professional advisers have failed in their duties, giving a contact address.
• The address where people should send enquiries about the scheme generally or about an individual's benefit entitlement.

Contributions

The trustees have the responsibility to advise you if the employer pays contributions late. Employee contributions must be paid by the 19th of the following month and you must be informed within 90 days of that date if they are late by 60 or more days.

Surprisingly this requirement does not apply to Additional Voluntary Contribution (AVCs) but failure of trustees to follow the same rules could be considered as maladministration.

Trustees of a company scheme must maintain a schedule of contributions which you can see on request.

Details of benefits

• Annual statements
• Combined Forecasts
• Early Leavers' rights and benefits

Annual statements

Members of a money purchase occupational scheme should be provided automatically with an annual statement within 12 months of the end of the scheme year.

The following information should be contained in this statement:

• The value of your fund on the day before the first day of the statement year.
• The value of your fund on the last day of the statement year and the amount of any investment gain/loss arising from that year.
• Details of member contributions.
• Details of employer contributions.
• Payment of tax relief by the Inland Revenue
• Payment of any contracted-out rebate made on your behalf, (this is a rebate due to being contracted-out of the State Second Pension).
• Date of birth and any age-related rebate details.
• The value of any benefits transferred from a previous scheme, including the date it was received and the name of the scheme.
• The amount deducted from contributions towards payment of the scheme charge.
• Any other deductions.
• Projected pensions given in today's value, taking into account how inflation between the date of the statement and your expected retirement date could reduce the buying power of your pension income.

Members of a final salary occupational scheme have to request a statement of their estimated pension at their normal retirement date. Once requested, a statement should be provided within 2 months.

Combined Forecast

With a member's permission, the pension scheme may approach the Department of Work and Pensions to obtain details of that member's estimated State Pension entitlement, and include this information in the Annual Statement. This is called a Combined Forecast.

Early Leavers' rights and benefits

Members of occupational schemes whose pensionable service ends before the scheme's normal retirement date should automatically receive documentation relating to their pension rights and options within 2 months of the trustees receiving notification that pensionable service has ended.

Transfers

Members of an occupational final salary scheme who have left pensionable service should on request receive a written statement of their transfer value, giving what is termed a 'guarantee date'. As from 6 April 1997 you have a legal right to the amount stated if you confirm in writing to the trustees within three months of the guarantee date that you would like the transfer to be paid.

Legally, trustees/scheme authorities have up to 6 months from the guarantee date (i.e. the date on which the transfer value was calculated) in which to pay your transfer value. If they delay payment of a transfer value without good reason for more than 6 months, they are obliged to increase the amount of the transfer value either by adding interest or by recalculation. (Under a money purchase scheme the trustees/scheme authorities have up to 6 months from the date of your written request in which to pay the transfer.) If the trustees/scheme authorities wish to delay making payment for more than 12 months, they are obliged to obtain prior approval from the Occupational Pensions Regulatory Authority.

Members of a money purchase occupational scheme should receive an estimate of their transfer value or cash equivalent within 3 months of requesting one.

Payment of Benefits

Information about benefits due to you must be provided in the following circumstances:

Upon Retirement

A member of a money purchase occupational scheme should receive a statement of their retirement options automatically at least 6 months before reaching their normal retirement date.

A member of a final salary occupational scheme should receive a statement of their retirement options automatically within 1 month following the date the benefit becomes payable. This period can be 2 months if the member is retiring before normal pension age.

The earliest possible retirement date (except in the event of ill health or special occupations) is your 50th birthday and the latest is your 75th birthday. If you have contracted out of the State Second Pension, the earliest that you can claim the contracted out fund (known as protected rights) is your 60th birthday.

Death

Upon the death of a member any rights and options due to any person as a consequence must be quoted as soon as practicable and not more than 2 months after notification of the death.

Ceasing to Contract-Out

In the event of a contracted out money purchase pension (COMP) scheme ceasing to be contracted out, affected members should be informed automatically within 1 month. Any related additional information should be provided within 4 months of the scheme ceasing to contract out.

Changes

Members and beneficiaries of occupational schemes should automatically receive notification of any changes in basic scheme information within 3 months of the effective date of change.

Changes to benefits in payment should be notified automatically to members and beneficiaries within 1 month of taking the decision to change benefit or, if later, before or within 1 month of the effective date of change.

Documents

There are numerous documents (listed below) that scheme members have an entitlement to receive on request. However, with the exception of the latest scheme annual report, you can be charged for the copying, posting and packing of the documents.

• 'Scheme Documents'
• Trustees Report & Accounts
• Scheme Audited Accounts
• Statement of Investment Principles
• Actuarial Valuation
• Schedule of Contributions

'Scheme Documents'

On request, you are entitled to receive a copy of the documentation that governs the constitution and operation of the scheme. This documentation would normally consist of the trust deed, the rules and any amending deeds. This information should be made available within 2 months of the request being made.

Report & Accounts

Schemes that are established under trust must produce an annual report within 7 months of the end of the scheme year. This should be provided on request to members, prospective members, their spouses, beneficiaries and any trade union within 2 months of being requested. The annual report should contain the following information:

• Miscellaneous information - For example, the address to which enquiries about the scheme generally or about an individual's entitlement to benefits should be sent.
• Financial Information - For example, a copy of the audited accounts and the auditor's statement.
• Investment Information - For example, an investment report giving a review of the investment performance of the fund during the year and also for a longer period of between 3 and 5 years.

Scheme Audited Accounts

An auditor must be appointed to every occupational pension scheme, except:

• where the assets of the scheme are secured by a Minister of the Crown;
• where the scheme is established by the Salvation Army Act 1963;
• where the scheme is neither approved nor statutory;
• public service schemes;
• unfunded schemes;
• schemes with less than 2 members;
• schemes providing death benefits only;
• SSASs, where all members are trustees and all decisions are made unanimously only by the trustees;
• schemes with a superannuation fund as per section 615(6) of the Taxes Act;
• some specific Royal Dockyard schemes;
• the Atomic Weapons Establishment Scheme;
• the BR Shared Cost Section of the Railways Pension Scheme.

Unless the scheme is a money purchase scheme where benefits are secured by earmarked insurance contracts, the trustees must obtain audited accounts. This must be done for each scheme year, and produced not more than seven months after the end of the scheme year. A copy must be available on request as part of the Scheme Annual Report.

Information that should be contained in the accounts includes:

• Movements in the value of the scheme fund during the accounting year, including contributions and withdrawals.
• Details of the assets and liabilities (other than liabilities to pay benefits after the end of the scheme year).
• The distribution of the assets between:
• insurance policies;
• fixed interest investments;
• securities (including index-linked);
• equities;
• property;
• unit trusts;
• managed funds;
• loans (whether or not secured by mortgages); and
• cash (whether deposits or 'in hand';)
• Details of which investments are held within the UK, and which are overseas, and, where any assets or liabilities relate to other currencies, an explanation of any currency conversion bases.
• Details of any investment (other than in UK Government securities) which makes up more than 5% of the total value of the scheme assets.
• Details of any employer-related investments (and any in excess of the prescribed restrictions on such investments under Section 40 of the Pensions Act 1995).
• A comparison of all the above items between this year scheme year and the previous one.
• Details of sales and purchases during the scheme year.
• Confirmation that the accounts have been prepared in accordance with the Statement of Recommended Practice, the guidelines ('Financial Reports of Pension Schemes') published by the Pensions Research Accountants Group or another organisation approved for this purpose by the Accounting Standards Board. If this is not possible, an indication of where there are any material departures from those guidelines.

The accounts must show a true and fair view of the financial transactions of the scheme during the year, and the amount and disposition, at the end of the scheme year, of the assets and liabilities. This must be confirmed by a report from the auditor stating whether or not these requirements are satisfied.

The trustees must also obtain a statement from the auditor as to whether or not contributions have been paid in accordance with the schedule of contributions (for a defined benefit scheme) or payment schedule (for a money purchase scheme). If such a statement is negative or qualified, an appropriate explanation must be added.

Statement of Investment Principles

The trustees or scheme manager must put in writing a statement of the principles governing decisions about scheme investments. This statement must be provided to scheme members, prospective members, their spouses, beneficiaries and any trade union within 2 months of being requested.

This statement must cover amongst other things:

• The policy relating to diversification.
• The policy for ensuring the suitability of investments.
• The arrangements for obtaining advice on the suitability of investments.
• The kinds of investment to be held.
• The balance between different types of investment.
• Risk attitude.
• The expected rate of return on investments.
• Policy for the realisation of investments.
• The extent to which social, environmental or ethical factors are taken into consideration in the selection, retention and realisation of investments.
• The exercise of the rights attaching to investments.

Please note that you can only request this statement once in any 12-month period.

Actuarial Valuation

Occupational final salary scheme members, their prospective members, spouses, beneficiaries and any trade union are entitled to receive a copy of the scheme's last actuarial valuation within 2 months of requesting one. Members are also entitled to receive a copy of the minimum funding requirement failure report should this occur.

Schedule of Contributions

This document must show the total employee and employer contributions over a specified period of time (commonly on an annual basis). This must be provided on request to members, prospective members, their spouses, beneficiaries and any trade union within 2 months of the request being made.

Winding Up

Members and beneficiaries of occupational pension schemes should receive an announcement automatically within 1 month of a scheme starting to wind up. Annual progress updates should then be provided automatically.

Winding up deferral and priority rules should be provided automatically to members and beneficiaries within 1 month of the decision being taken. Final notification of winding up should be issued automatically within 3 months of liability being discharged.

Once a transfer has been made the trustees or managers must issue an additional notice to each member, within 1 month of making the transfer, stating the:

• Amount of the payment
• Name and address of the scheme, and
• Date it was paid.