pension trustee

Increasingly complex regulations govern pension scheme wind ups – finding the right trustees to oversee the process is crucial. Pension scheme wind ups present a range of administrative challenges and difficulties – but with trustee companies now tailoring their services to those specific difficulties, industry experts say many pitfalls of termination proceedings can be avoided.

In an uncertain economic climate, the fragility of pension schemes is often exposed: insolvency, rising contribution costs or the merger of one company with another may all lead a pension to become defunct. Characteristics of pension scheme wind ups may be broadly similar but it is the particulars of any given case that can cause problems. When this happens, scheme members need protection and transparency in order to maximise their future benefits and ensure a stable financial transition.

When trustees handling pension scheme wind ups are not fully able to exercise their duties, confusion, unhappiness and anger are never far off. The basic responsibilities of any trustee will be to inform members of the status of wind up proceedings – and the reasons for them. The trustee must be a contact point for members trying to seek information about the wind up – in addition to providing advice to any other affected parties.

Depending on the reasons for and circumstance of pension scheme wind ups, trustees should be able to take appropriate action in the best interest of beneficiaries. In some cases the contributions and assets can be protected or transferred – in contrast to insolvency situations, company mergers will present alternative schemes available to members and it is up to the trustee to communicate the benefits of those transfers.

In many circumstances, a winding up pension will have access to government funds which can help shield existing members from worst-case scenarios. Pension schemes are able to apply to the Pension Protection Fund (PPF) and the Financial Assistance Scheme (FAS) – which offer levels of compensation to members of defunct schemes – protecting some, or even all of their pension.

Entry into these compensatory funds brings its own set of challenges – and the application process can be a minefield. With an increasing incidence of high-deficit pension scheme wind ups, the pressure put on PPF and FAS funding is higher than ever. Seeking professional trustee services is a way of ensuring a pension scheme has the best chance of obtaining compensation for its members.

Companies, like Dalriada Trustees Limited, have begun to offer services designed to expedite pension scheme wind ups in which PPF and FAS application is necessary. Professional trustees at Dalriada, including lawyers, actuaries and accountants, bring a level of individual skill to wind up proceedings which can be crucial to navigating the application process – minimizing costs and securing the best outcome for members.

The level of communication and understanding between companies, trustees and their beneficiaries is a hugely important factor in any wind up. Companies wishing to help their members through the uncertainty of the process should look for trustees with the expertise and experience to best resolve their situation.