GLOSSARY

Money purchase scheme definition

Published by a LexisNexis Pensions expert

What does Money purchase scheme mean?

A pension where your contributions are invested in, for example, the stock market.

The size of your pension fund depends on how much is invested and how well those investments do. At retirement some, or all, of the fund may be used to buy an annuity or unsecured pension.

Minimise

View the related practice notes about Money purchase scheme

Death benefits—money purchase schemes

FORTHCOMING DEVELOPMENT: The Office of Tax Simplification (OTS) has released a report outlining recommendations to make considerable aspects of the design of inheritance tax (IHT) simpler, more intuitive and easier to operate. One of the recommendations is that the government should consider ensuring that death benefit payments from term life insurance are IHT free on the death of the life assured without the need for them to be written in trust. In relation to pensions, the OTS says that IHT could similarly be simplified by changing the current anomalous position under which some pension policies can be included within an estate for IHT purposes while other comparable pension savings, set up under discretionary trust, are not. The OTS notes that in relation to defined contribution pensions, the main reason discretionary trusts are currently used to provide death benefits is to keep such pension savings outside IHT. For more information, see: OTS Inheritance Tax review: Simplifying the design of the tax, Chapter 6, pp 52–55.THIS PRACTICE NOTE APPLIES ONLY TO REGISTERED MONEY PURCHASE OCCUPATIONAL PENSION SCHEMESMost pension schemes provide for benefits upon the death of the members. What those benefits will be depends on:•the type of scheme and what benefits it provides—different death benefits are available depending on whether the scheme is a money purchase scheme or a

Maternity and other statutory family leave—the pension requirements

Periods of statutory family leave include:•maternity leave—for further information, see Practice Note: Maternity leave•paternity leave—for further information, see Practice Note: Paternity leave and pay•adoption leave—for further information, see Practice Note: Adoption leave•parental leave—for further information, see Practice Note: Parental leave•shared parental leave—for further information, see Practice Notes: Shared parental leave (birth) and Shared parental leave (adoption), and•parental bereavement leave—for further information, see Practice Note: Parental bereavement leave and payProtection of pension rights during periods of statutory family leaveLegislation protects the pension rights of members of occupational pension schemes and other ‘employment-related benefit schemes’ who are absent from work due to a period of statutory family leave. The treatment of members' pension rights may vary depending on the type of scheme and whether the statutory leave is paid or unpaid.The term ‘employment-related benefit scheme’ is defined by the Social Security Act 1989 (SSA 1989) and this definition is still in force today. It is wider than the definition of ‘occupational scheme’ and broadly refers to a workplace scheme or arrangement which provides pension benefits to employed or self-employed earners, but does not include:•any personal scheme for employed earners to which the employer does not contribute•any scheme with only one member, other than a personal scheme for an employed earner to which

Discover our 49 Practice Notes on Money purchase scheme

TAKE A FREE TRIAL

View the related precedents about Money purchase scheme

Business sale—pensions due diligence enquiries

Business sale—pensions due diligence enquiries Note: the due diligence enquiries are drafted for the buyer and are general in scope. Not every enquiry is relevant to every pension scheme. In practice, they should be amended as necessary to reflect the circumstances of the relevant transaction (and relevant pension schemes). Note: the definition of ‘Business’ and ‘Seller’ in this questionnaire intends to mirror the definition set out in the sale and purchase agreement of the actual business being acquired by the buyer. The buyer will not (usually) inherit the seller’s pension scheme in an asset sale. 1 Pensions 1.1 Please list (a) all pension schemes to which the Seller is currently contributing (or would be contributing but for a contributions holiday) or otherwise participates in; (b) all life assurance schemes and/or other such protection schemes; and (c) any former pension schemes of the Seller that applied prior to the existing schemes 1.2 In relation to every pension or retirement benefit scheme or life assurance scheme and/or other such protection scheme affecting employees of the Business (including those registered pursuant to the Finance Act 2004 or otherwise) (each being a 'Scheme') please provide: (a) copies of all governing documentation, including copies of the trust deed and rules and other relevant documents, whether issued by the trustees of the Scheme or otherwise (such as explanatory booklets, announcements or other communications etc) (b) a list of

Share purchase agreement—long form pensions warranties (where target company has a defined benefit (DB) scheme)

Share purchase agreement—long form pensions warranties (where target company has a defined benefit (DB) scheme) This precedent has been prepared on the basis that the drafter is acting for the buyer Drafted on the basis that the target company (the Company) is a subsidiary of the Seller. You are strongly advised to involve a pensions specialist at the earliest opportunity. 1 Definitions For the purposes of paragraphs 2 to 9 inclusive: Employee means a present or former employee, officer or director of the Company [or of any Group Company ] [and any other person taking part in the management of the affairs of the Company]; Pension Scheme[s] mean[s] [[name(s) of scheme(s)] OR an arrangement or practice for the payment of, or contribution towards, an annuity, pension, lump sum, gratuity or similar benefit to be given on retirement, ill-health, death or change in service status, or pursuant to a pension sharing order, in relation to the service or historic service of an Employee or any other person, or for the benefit of that individual’s dependants]. 2 No other obligations or commitments Except as provided for by the Pension Scheme[s]: 2.1 [the Company is not OR no Group Company is] participating and never has participated in any agreement or arrangement, or has entered into any obligation or commitment (whether funded or unfunded and whether legally binding or otherwise), to provide or contribute towards any pensions, annuities, lump

Dive into our 6 Precedents related to Money purchase scheme

TAKE A FREE TRIAL

View the related q&as about Money purchase scheme

Where an employee is transferring from one employer to another by virtue of TUPE, where the transferor is the parent company and the transferee is the subsidiary what are the options for the group companies in respect of the transferring employee's occupational pension? Would the answer change where the transferor has a smaller shareholding?

Where an employee is transferring from one employer to another by virtue of TUPE, where the transferor is the parent company and the transferee is the subsidiary what are the options for the group companies in respect of the transferring employee's occupational pension? Would the answer change where the transferor has a smaller shareholding? We have assumed that the transferor's scheme is an occupational pension scheme—the answer would be different if the transferor had a contractual obligation to contribute to a transferring employee's personal pension scheme. The answer will depend on the circumstances. Where the transferor employer and the transferee are in the same group of companies, it is possible they both participate in the same occupational pension scheme. In that case, the employees may be able to continue their membership of the scheme on the same terms and the transfer will have little impact. It may be less likely that a joint venture company would participate in the transferor's scheme though certainly not impossible. If the transferee employer does not participate in the transferor employer's scheme, the transferring employees' pensionable service in the transferor's scheme will terminate as a consequence of the transfer. Depending on what scheme the transferee offers and any arrangements for a bulk transfer between the schemes, the transferring employees could be disadvantaged. For example, if the transferor employer has a defined benefit scheme, the

The wife of a deceased member has requested information regarding the deceased member's pension from the trustees of a pension scheme in order to support a medical negligence claim, but the wife is neither a current or prospective beneficiary under the scheme. In these circumstances: (i) if the scheme trustees do not disclose the information and the wife complained to the Pensions Ombudsman, would the complaint fall within the remit of the Ombudsman, and (ii) if the complaint does fall within the Pensions Ombudsman’s remit and the complaint is successful, what award could the Ombudsman make?

The wife of a deceased member has requested information regarding the deceased member's pension from the trustees of a pension scheme in order to support a negligence'>medical negligence claim, but the wife is neither a current or prospective beneficiary under the scheme. In these circumstances: (i) if the scheme trustees do not disclose the information and the wife complained to the Pensions Ombudsman, would the complaint fall within the remit of the Ombudsman, and (ii) if the complaint does fall within the Pensions Ombudsman’s remit and the complaint is successful, what award could the Ombudsman make? It is stated that the wife of the deceased member is neither a current or prospective beneficiary under the pension scheme. However, it is not specified if the occupational pension scheme was contracted-out of the State Earnings Related Pension Scheme (SERPS) or was a contracted-in scheme. For example, since 1978, all occupational pension schemes (and personal pension schemes) which contracted-out of SERPS had to provide for a survivor’s pension for a widow. In relation to defined benefit schemes, guaranteed minimum pensions (GMPs) accrued until 1997 when the reference scheme test was introduced. Any survivor’s benefits in excess of these minimum requirements depended on the actual provisions of the occupational pension scheme’s trust deed and rules (and any amending legislation and case law which extended spouses’ benefits to same-sex spouses, for

See the 2 Q&As about Money purchase scheme

TAKE A FREE TRIAL

View the related News about Money purchase scheme

Legislation Day: Draft Finance Bill 2023—Tax analysis

Tax analysis: On Legislation Day, 20 July 2022, the government published draft provisions to be included in Finance Bill 2023 (FB 2023, also known as Finance Bill 2022–23) together with accompanying explanatory notes, other supporting documents and consultation responses. This analysis brings together the key business tax provisions and explains the changes being made.

Tax weekly highlights—24 March 2022

This week's edition of Tax weekly highlights includes:(1) the Spring Statement 2022 and (2) the Supreme Court decision in HMRC v NCL Investments that accounting debits from grants of share options from an EBT were allowed for tax purposes.

Read the latest 20 News articles on Money purchase scheme

TAKE A FREE TRIAL

Speed up all aspects of your legal work with tools that help you to work faster and smarter. Win cases, close deals and grow your business–all whilst saving time and reducing risk.

Case studies

"It's hard to quantify, right now. But at a guess, I'd say it's probably more than 50% faster, at times. It's literally that quick. We've found to be an essential practical tool. We're very satisfied."

Walsall Council

Access all documents on Money purchase scheme

GET ACCESS NOW

Top