Scheme Returns: risks for pension trustees

Topic:

Legal & governance

Date published:

Monday, 20 February 2017

Author:

James Double

Pension Scheme Returns are now available online for completion and pension trustees need to be certain the return for their scheme is completed and submitted within the deadline. As there are so many areas on a Scheme Return that can trip you up or have a big impact on the size of the PPF levy payable by your scheme, accuracy is vital.

The areas we pay particularly close attention to include:

Chair’s statement (for pension schemes with DC sections) - if you don’t have one, you will be fined by the Pensions Regulator (tPR)

Last man standing scheme - a question we know the PPF have been challenging, but confirmation of legal advice is only relevant for multi-employer schemes who are claiming last man standing scheme status

s179 valuation information - this directly affects the PPF levy amount

investment - this also has an impact on the levy calculation

liability hedging – if advisers have undertaken this analysis it could help reduce the levy

Examples of errors on scheme returns that have had a financial impact:

• transposed numbers in s179 valuation information resulting in a higher PPF levy being calculated
• incorrectly recording a multi-employer scheme as a last man standing scheme that, when challenged by PPF and corrected, resulted in the employer being invoiced for an additional levy for prior years

New questions this year

There are some new questions this year (see tPR’s checklist). Fortunately, most are self explanatory but a couple are worth highlighting:

• SORP accounting change – ensure annuities are treated correctly in the s179 asset and liability values
• defined benefit (DB) transfers – completing this will require some quite detailed and specific information from the scheme administrator

Scheme Returns are usually completed by the trustee secretary, scheme administrator or another adviser, but information will be needed from many different parties. It is important to start completing the Scheme Return as early as possible as different parties may need to be contacted for information. An inaccurate or incomplete return can expose pension trustees to risk so extra care needs to be taken.

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