Running a pension scheme

Winding up a pension scheme

When an occupational pension scheme is winding up this involves terminating the scheme and using the assets for members' benefits.

Winding up a scheme is not the same as closing a scheme. Closing a scheme means the scheme still exists but new members are not admitted.

The trust deed or scheme rules may set out the various triggers for a scheme being wound up, which may include:

• the employer deciding it no longer wishes to operate the scheme
• no contributions being received from the employer for a set period of time
• the business having become insolvent

The trustees are responsible for winding up the scheme. The trust deed may set out the winding-up process but it can be a complicated process and trustees should seek advice from the scheme's professional and legal advisers.

The trustees must also:

• notify HM Revenue & Customs and the Pension Tracing Service
• report to the pensions regulator if the winding up takes longer than three years

Informing members
The trustees must provide certain information to members within a month of the date the winding up starts and provide updates every 12 months.

As the employer you might want to provide additional reassurance to those affected by the fact that the scheme is being wound up. Ensure all affected persons (including those in receipt of pensions, prospective members and members' spouses) are contacted. It may be possible to address employee concerns through staff representatives or the employees' trade union. See our guides on how to work effectively with trade unions and also on working with employee representatives.

Accounting for the assets
The trustees must get professional advice to ensure that all the scheme's assets - eg investments and contributions - are accounted for and liabilities are valued.

Read about winding up a business' pension scheme at the pensions regulator website.

Employer debt
If a pension scheme's assets are not sufficient to meet its liabilities, then legislation creates a debt on the employer to the trustees of the scheme.

Subjects covered in this guide

• Introduction
• Regulations for setting up a pension scheme
• Pension trustees' role and responsibilities
• Running a pension scheme effectively
• Changes to a pension scheme
• Winding up a pension scheme
• Checklist for employers and pension scheme trustees
• Buying or selling businesses with pension schemes

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