Schemes may be prevented from paying sponsors

According to section 251 of the 2004 act, “no payment” can be made in future to employers by schemes, unless trustees have passed a resolution agreeing to this by April 6, 2011.

The 1995 legislation defined rules for schemes in surplus who wish to transfer money to sponsors. But the new law appears to entirely prohibit this for schemes whose trustees have not voted to make it an option.

David Pollard, pensions partner at lawyers Freshfields, warned he is not aware of any trustee boards voting on the necessary resolution, despite scheme members needing three months’ notice before one can be passed. He said: “Schemes may well be thinking being in surplus is the least of their worries at the moment, but what about in 10 years’ time?

“We and other law firms are advising our clients to move quickly to avoid future problems, but it’s something all schemes should be aware of.”

City law firm Norton Rose warned about the issue on its website earlier this month. “The retention of any option for the repayment by the trustees of a surplus to an employer should be addressed as soon as possible,” it stated.