earned their rights (often to specific entitlements if specific circumstances exist in the
opinion of the trustee), the scope for intervention by the courts (and thus the Pensions
Ombudsman) is much greater than for traditional family trusts. Pension trusts thus need
to be recognized as sui generis species of trust: decisions thereon should leave unaffected
principles applicable to traditional trusts. Sui generis character of the trust relationship
implies the characteristic of the trust to distinguished itself from other legal concepts,
such as, for instance, powers and fideicommissum and usufruct respectively of Civil Law.
Reformers hope to utilize pension trusts assets in amending industrial relations, securing
job security and wage gains, and deploying capital to credit-starved industries and
regions have hardly been legalistic in origin. The legal regulation of retirement benefits
nonetheless figures as the most common and perhaps the most prominent subject of
debate regarding the investment of pension assets.
-> Pensions Act 1995 :
The Pensions Act 1995 is a piece of United Kingdom legislation to improve the running
of pension schemes.The main features of the Act include : (en.wikipedia)
The establishment of the Occupational Pensions Regulatory Authority.
The Minimum Funding requirement to ensure that all pension schemes had a
minimum amount of money;
A compensation fund for pension schemes in the event of fraud.
Protection for existing pension scheme benefits so that they could not be refuse in
A requirement for pension schemes to have member nominated trustees
Greater disclosure of information to members
The introduction of...
The UK Pensions Act 2004 came into force on April 6, 2005. It substantially affects companies with defined benefit pension plans in the UK and creates potential exposure for directors and certain control persons of companies with under-funded pension plans. For private equity sponsors investing in UK companies, it will be important for adequate diligence to be performed on pension plans of target companies prior to making an investment and to structure the investment and operate the company in a manner to reduce the risk that the new UK pensions regulator may assert a claim against the sponsor or its representatives under the Pensions Act. The Pensions Act 2004 amends the investments provisions of the Pensions Act 1995 to implement changes required by the EU Occupational Pensions Directive.
Two key features of the Pensions Act 2004 are:
- it establishes a Pension Protection Fund to compensate members of underfunded pension plans where the sponsoring company is insolvent and unable to continue as a
going concern and it provides the pensions regulator with the power to make claims against third parties (in addition to the employer) for any funding shortfall in a defined benefit pension plan (the so-called “moral hazard” provisions). For private equity sponsors, the key area of concern arising under the Pensions Act 2004 is these moral hazard provisions,
particularly the potential financial exposure they may create. The purpose of the moral hazard provisions is to reduce the likelihood of pension liabilities.