Bulk transfers between occupational pension schemes—an introduction
Produced in partnership with Richard Evans of Mayer Brown
Bulk transfers between occupational pension schemes—an introduction

The following Pensions practice note Produced in partnership with Richard Evans of Mayer Brown provides comprehensive and up to date legal information covering:

  • Bulk transfers between occupational pension schemes—an introduction
  • Introduction
  • Circumstances in which bulk transfers are made
  • Active members
  • Members' consent
  • Overview of main issues for trustees
  • Is there power to implement the proposal?
  • Assuming that there is power, should it be exercised?
  • Scheme rules—power to make or accept transfers
  • Preservation requirements
  • More...

Introduction

This Practice Note considers bulk transfers between occupational pension schemes. A bulk transfer is the transfer of a group of members from one scheme (the transferring scheme) to another (the receiving scheme). The transferring scheme will make a transfer payment to the receiving scheme, covering all of the transferring members. The transferring members will cease to be entitled to benefits in the transferring scheme, and will become entitled to benefits under the receiving scheme.

Circumstances in which bulk transfers are made

Bulk transfers are most commonly made in conjunction with the merger or demerger of schemes. This may occur where an employer is selling or demerging part of its business, or where an employer wishes to bring two schemes together to achieve economies of scale.

Even if the intention is to wind up the transferring scheme, normal practice is to make a bulk transfer while the scheme remains ongoing, with the scheme later being wound up as an empty shell. For simplicity this note deals only with bulk transfers from ongoing schemes.

Depending on the circumstances, the receiving scheme may be either a pre-existing arrangement (with pre-existing assets and liabilities) or a brand new arrangement established for the purposes of the bulk transfer.

Normally bulk transfers are between schemes of the same type—ie either defined benefit (DB) or defined contribution (DC). Bulk transfers between schemes of different types (eg

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