Employer-related investments
Produced in partnership with Wyn Derbyshire of gunnercooke LLP
Employer-related investments

The following Pensions guidance note Produced in partnership with Wyn Derbyshire of gunnercooke LLP provides comprehensive and up to date legal information covering:

  • Employer-related investments
  • What are employer-related investments?
  • What are the prescribed investments?
  • What restrictions apply in relation to employer-related investments?
  • SSAS exemption
  • Penalties
  • Reporting requirements
  • The Pensions Regulator’s approach to potential employer-related investment breaches
  • For further information, see:

THIS PRACTICE NOTE APPLIES TO REGISTERED OCCUPATIONAL PENSION SCHEMES

As a general rule, subject to the specific governing provisions of their trust deed and rules, registered occupational pension schemes can make investments without restrictions to the scope of such investments. There are however exceptions to the general rule.

Perhaps the most important exceptions to the general rule are the restrictions imposed under section 40 of the Pensions Act 1995 (PA 1995) and the Occupational Pension Schemes Act (Investment) Regulations 2005, SI 2005/3378 (the Investment Regulations) which restrict trustees’ ability to invest in employer-related investments. These restrictions, which are the subject of this Practice Note, seek to provide statutory backing for the general principle that trust funds should be divorced from the employer's assets in order to ensure a greater measure of security for scheme members.

Note that small self-administered schemes (SSASs) are not subject to these restrictions—see: SSAS exemption below.

What are employer-related investments?

Statutory definition

‘Employer-related investments’ are defined in legislation as:

  1. shares or other securities issued by the employer or any person ‘connected with’ or an ‘associate of’ the employer

  2. land which is occupied or used by, or subject to a lease in favour of, the employer (or any associated or connected person)

  3. property (other than land) which is used for the purposes of any business carried out by the employer