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Pensions in 30: 12. Refunds of surplus to employer
Manage episode 183242207 series 1460512
Key points
- There are circumstances in which a defined benefit pension scheme may have a funding surplus.
- Refund of surplus to an employer is permitted if certain requirements are met, which differ depending on whether the scheme is ongoing or in wind-up. The requirements include:
- Ongoing scheme: power in the rules, refund within limit specified by actuary, in members’ interests to exercise power, 3 months’ notice to members.
- Scheme in wind-up: power in the rules, scheme liabilities fully discharged, any power to pay surplus to others considered, 3 months’ notice to members.
- Section 251 of the Pensions Act 2004 provides that, for an ongoing scheme, the refund or surplus power is lost unless the Trustees pass a resolution meeting the requirements of section 251 to retain the power by 5 April 2016. In practice, this means Trustees must have given written notice of their intention to make such a resolution to members and employers by 4 January 2016.
- Under the Finance Act 2004, a refund of surplus payment will attract a 35% tax charge payable by the Trustees, which should be deducted from the surplus payment before it is paid.
You can find this episode and the accompanying transcript on our website: https://gowlg.co/3L8ygFB
Gowling WLG is an international full-service law firm working across a range of industry sectors including real estate, government, financial services, life sciences and technology. We operate across the world with offices in the UK, Europe, Canada and the Middle East.
We regularly talk about a broad range of topics that may be of interest to you. Subscribe to receive our latest articles, podcasts and webinars straight to your inbox: https://gowlg.co/35efH2r
Alternatively, you can view our full selection of insights and resources here: https://gowlg.co/3IwEr41
Want to get to know us? Follow us on:
LinkedIn: https://gowlg.co/3hqmatB Twitter: https://gowlg.co/35Do0nY Facebook: https://gowlg.co/3th2w8N Instagram: https://gowlg.co/3tEf2iq
This podcast may contain information of general interest about current legal issues, but does not give legal advice.
51 episodes
Manage episode 183242207 series 1460512
Key points
- There are circumstances in which a defined benefit pension scheme may have a funding surplus.
- Refund of surplus to an employer is permitted if certain requirements are met, which differ depending on whether the scheme is ongoing or in wind-up. The requirements include:
- Ongoing scheme: power in the rules, refund within limit specified by actuary, in members’ interests to exercise power, 3 months’ notice to members.
- Scheme in wind-up: power in the rules, scheme liabilities fully discharged, any power to pay surplus to others considered, 3 months’ notice to members.
- Section 251 of the Pensions Act 2004 provides that, for an ongoing scheme, the refund or surplus power is lost unless the Trustees pass a resolution meeting the requirements of section 251 to retain the power by 5 April 2016. In practice, this means Trustees must have given written notice of their intention to make such a resolution to members and employers by 4 January 2016.
- Under the Finance Act 2004, a refund of surplus payment will attract a 35% tax charge payable by the Trustees, which should be deducted from the surplus payment before it is paid.
You can find this episode and the accompanying transcript on our website: https://gowlg.co/3L8ygFB
Gowling WLG is an international full-service law firm working across a range of industry sectors including real estate, government, financial services, life sciences and technology. We operate across the world with offices in the UK, Europe, Canada and the Middle East.
We regularly talk about a broad range of topics that may be of interest to you. Subscribe to receive our latest articles, podcasts and webinars straight to your inbox: https://gowlg.co/35efH2r
Alternatively, you can view our full selection of insights and resources here: https://gowlg.co/3IwEr41
Want to get to know us? Follow us on:
LinkedIn: https://gowlg.co/3hqmatB Twitter: https://gowlg.co/35Do0nY Facebook: https://gowlg.co/3th2w8N Instagram: https://gowlg.co/3tEf2iq
This podcast may contain information of general interest about current legal issues, but does not give legal advice.
51 episodes
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