Regulation of Pension Funds

Question 1

What does the pensions regulator regulate?

Answer 1

Regulates final salary (defined benefit) occupational pension schemes

Question 2

What does the pension regulator increase?

Answer 2

Increased the ability of pension trustees to act independently from the employer

Question 3

What must Trustees of a pension do?

Answer 3

o Appoint their own actuary, auditor and financial advisers

o Produce a statement of investment principles (SIP), reviewed every three years

Question 4

What new body did the Pensions Act 2004 bring in?

Answer 4

New regulatory body (the pensions regulator)

Question 5

What fund did the pensions act 2004 bring in?

Answer 5

• New pension Protection Fund (PPF) – is funded by defined benefit pension schemes – effectively sets a target to meet. If shortfall in the pension fund and company can’t pay then the PPF will pay this

Question 6

What other regulation did the Pensions Act 2004 bring in?

Answer 6

Scheme specific funding requirement

Question 7

When was the pensions act 2008 implemented?

Answer 7

2012

Question 8

What was the main requirement of the 2008 pensions act?

Answer 8

• Main requirement: ‘eligible workers’ automatically enrolled in either their employer’s scheme or a new savings vehicle (NEST)

Question 9

Under the 2008 pensions act what counts as an eligible worker?

Answer 9

Between 22 and retirement age, and not in a workplace scheme

Question 10

Since the 2008 pensions act what recent changes have occurred with pensions?

Answer 10

• Lump sum payment: money can be withdrawn from the accumulated fund (up to 25% tax free).
• Flexi-access drawdown: accumulated fund can be put in a draw-down fund (commencement lump sum up to 25% tax free/ drawdowns taxed as income