Amendment of occupational pension schemes—employer and trustee considerations
Amendment of occupational pension schemes—employer and trustee considerations

The following Pensions guidance note provides comprehensive and up to date legal information covering:

  • Amendment of occupational pension schemes—employer and trustee considerations
  • Employer considerations
  • Duty of trust and confidence
  • Contractual considerations
  • Statutory requirement to consult employees
  • Trustee considerations
  • Considerations for both employers and trustees
  • Exercising the power of amendment in a scheme's trust deed and rules
  • Restrictions on amendments under the scheme's amendment power
  • Statutory restriction on amendments
  • more

THIS PRACTICE NOTE APPLIES TO DEFINED BENEFIT OCCUPATIONAL PENSION SCHEMES

Sponsoring employers and trustees of defined benefit occupational pension schemes may need to amend a scheme's provisions for a variety of reasons. For example, the employer may wish to:

  1. change the scheme's benefit structure

  2. take account of legislative changes

  3. close the scheme to new members

  4. close the scheme to future accrual of benefits

  5. introduce a new defined contribution section

Whatever the reason, before making or agreeing to an amendment to an occupational pension scheme, sponsoring employers and trustees should ensure that they comply with their legal obligations under statute and common law.

Employer considerations

Sponsoring employers should consider carefully their duties under statute and employment law before making amendments to a scheme. In particular, the employer should consider:

  1. whether it is acting in accordance with its implied contractual obligation not, without reasonable and proper cause, to act in a way calculated or likely to destroy or seriously damage the relationship of trust and confidence between the employer and its employees (the duty of trust and confidence)

  2. whether the change is permitted under the employees' contracts of employment

  3. whether it needs to consult its employees on the change

Duty of trust and confidence

The sponsoring employer has an implied duty not, without reasonable and proper cause, to act in a way