My Dissolved Ltd Company Executive Pension Scheme Trustees

WSB

Hi,

I was self employed for 23 years and during this time I was paying into my Ltd Company's Executive pension scheme.

In 2021 I went into permanent employment and dissolved my Ltd company.

Have just received a letter from the scheme providers saying that the Ltd company was the pension scheme's trustee but as that company is now dissolved, I can either become trustee myself or move to one of their other schemes.

Have been warned by a friend that becoming a Trustee of this pension scheme could be a big headache without any advantage to me?
Would welcome any other opinions on that please?

Also, I'm concerned that taking the other option of moving to one of their other schemes would put me on higher charges. As my Ltd Scheme was setup 23 years ago, the charges I was paying were very favourable, so don't  want to be losing that.

I know this is a bit of a hybrid query but just wondering if anyone else out there has experienced similar or any suggestions?

Thanks in advance

Marcon

WSB said:

Hi,

I was self employed for 23 years and during this time I was paying into my Ltd Company's Executive pension scheme.

In 2021 I went into permanent employment and dissolved my Ltd company.

Have just received a letter from the scheme providers saying that the Ltd company was the pension scheme's trustee but as that company is now dissolved, I can either become trustee myself or move to one of their other schemes.

Have been warned by a friend that becoming a Trustee of this pension scheme could be a big headache without any advantage to me?
Would welcome any other opinions on that please?

Also, I'm concerned that taking the other option of moving to one of their other schemes would put me on higher charges. As my Ltd Scheme was setup 23 years ago, the charges I was paying were very favourable, so don't  want to be losing that.

I know this is a bit of a hybrid query but just wondering if anyone else out there has experienced similar or any suggestions?

Thanks in advance

Ask your friend to be explicit about what these 'big headaches' are. How much of a 'headache' was it for your limited company during the 23 years that was the scheme's trustee?

Grumpy_chap

Just to be clear, when the OP writes "my Ltd Co Executive Pension Scheme" does that mean a Ltd Co of which the OP was sole Director / Shareholder / Employee?
Or, does that mean a Ltd Co. of which the OP was sole Shareholder / Director but there were other Employees also?
Or, does that mean a Ltd Co. of which the OP was one of many Employees and the Shareholders / Directors were other individuals?

I think the OP means the first of the above, in which case the only beneficiary of the Pension Scheme trust would be the OP.
The OP's friend was likely referring to the case where an individual acts as Trustee for a corporate pension scheme which has many members.  Quite a different scenario.

Albermarle

I think the OP means the first of the above, in which case the only beneficiary of the Pension Scheme trust would be the OP.

However even then there is still some extra admin involved from my limited experience. I think you even have to pay a fee to be registered as a trustee.

Also, I'm concerned that taking the other option of moving to one of their other schemes would put me on higher charges. As my Ltd Scheme was setup 23 years ago, the charges I was paying were very favourable, so don't  want to be losing that.

OP - IN general charges have come down over the years, so I would not assume that a new scheme would have higher charges, maybe the opposite. You need to check.

xylophone

Is it possible to transfer the pension into your existing workplace pension scheme?

Marcon

[Deleted User] said:

WSB said:

Hi,

I was self employed for 23 years and during this time I was paying into my Ltd Company's Executive pension scheme.

In 2021 I went into permanent employment and dissolved my Ltd company.

Have just received a letter from the scheme providers saying that the Ltd company was the pension scheme's trustee but as that company is now dissolved, I can either become trustee myself or move to one of their other schemes.

Have been warned by a friend that becoming a Trustee of this pension scheme could be a big headache without any advantage to me?
Would welcome any other opinions on that please?

Also, I'm concerned that taking the other option of moving to one of their other schemes would put me on higher charges. As my Ltd Scheme was setup 23 years ago, the charges I was paying were very favourable, so don't  want to be losing that.

I know this is a bit of a hybrid query but just wondering if anyone else out there has experienced similar or any suggestions?

Thanks in advance

I'd suggest taking proper legal advice as you could end up very, very unhappy.

1. Dissolving the sole trustee means that the assets of the trust vest in the crown but are still subject to the trust.  That's quite an unusual situation.

2. Absent a specific provision in the trust deed for a non-trustee to appoint a new trustee (see my next point), my understanding is that you, as a beneficiary of the pension trust, could apply to the court for you to be a trustee (and I think for someone else to be trustee). 

3. You cannot appoint yourself as trustee (unless there is some specific provision in the trust deed that allows you to). Typically, the employer (which no longer exists) or the current trustees (who no longer exist) can. I have seen some pension trust deeds where the scheme administrator can appoint trustees so that may be a possible route without involving the courts.

4. If you are able restore the company at Companies House, it will not automatically be reinstated as trustee.  That's something for the court to do (or you/scheme administrator, if you have a specific power in the trust deed to do so).

5. I would worry about HMRC's attitude to their being no trustee as well as what tax legislation says.  For example, will that mean that the scheme will, automatically, have stopped being a registered pension scheme or will HMRC have the discretion to remove registration? I've not checked.

6. The pension scheme has to do an annual tax return to HMRC but I think that is done by the scheme administrator.

7. I would not want to be the sole trustee of my own pension scheme because if I die then it's going to be a dog's breakfast to try to be able to pay death benefits from a pension scheme without any trustee. If for some strange reason you think that is sensible, you also have to make sure that you are up to speed on trust and pensions law (see pensions regulator's website but note that there are some exemptions for small schemes).

8. I would also not want to be the sole trustee because of the risk of creating an unauthorised payment to myself since (i) I, as trustee, would hold the assets in my name, and (ii) I would be the beneficiary of the pension scheme.  There are very aggressive tax avoidance schemes out their where an individual holds assets to satisfy pensions obligations, purportedly allowing them to use the cash without paying income tax on it.  There is no way I would want to be associated with something that, even very slightly, looked like kind of aggressive avoidance scheme as HMRC's starting point will be that you are doing something very dodgy.

9. As well as proper legal advice, it's worth talking to the company's liquidator about this. They may have already taken this point onboard and done something about appointing another trustee.

I think you'll find it is, contrary to your moniker, much less complicated than that. As always it depends on the exact rules of the scheme, but the following general points are likely to apply.

1. The provider has already confirmed there are options open to OP under the terms of the EPP in question.
2. Not necessary if the scheme rules provide a solution, as appears to be the case.
7. Where there is no scheme trustee because the company is no longer trading, the company has been dissolved or the scheme trustee is the deceased, the legal personal representative(s) replace the scheme trustee.
8. An EPP is a particular form of DC pension. If OP is the only member, has reached the age where they can access funds, and pays tax where necessary, where's the likelihood of HMRC squawking about unauthorised payments?
9. A director can dissolve their own company, which is what appears to have happened here - and in the process did what so many  do: overlooked something (in this case the pension scheme).

WSB

Grumpy_chap said:

Just to be clear, when the OP writes "my Ltd Co Executive Pension Scheme" does that mean a Ltd Co of which the OP was sole Director / Shareholder / Employee?
Or, does that mean a Ltd Co. of which the OP was sole Shareholder / Director but there were other Employees also?
Or, does that mean a Ltd Co. of which the OP was one of many Employees and the Shareholders / Directors were other individuals?

I think the OP means the first of the above, in which case the only beneficiary of the Pension Scheme trust would be the OP.
The OP's friend was likely referring to the case where an individual acts as Trustee for a corporate pension scheme which has many members.  Quite a different scenario.

Good point. 
Yes, it was a simple one man band scenario whilst I was contracting. 
I was director, and shareholder and employee. My wife was company secretary. Briefly she was on the payroll and also had a pension under the same scheme. 
She also received the same letter. 
So is being a trustee for the scheme not much of a big deal? 

WSB

xylophone said:

Is it possible to transfer the pension into your existing workplace pension scheme?

Not sure. Could be a good option if possible 

prowla

(You weren't self-employed - that's a different thing to operating via a Limited Company.)

WSB

Albermarle said:

I think the OP means the first of the above, in which case the only beneficiary of the Pension Scheme trust would be the OP.

However even then there is still some extra admin involved from my limited experience. I think you even have to pay a fee to be registered as a trustee.

Also, I'm concerned that taking the other option of moving to one of their other schemes would put me on higher charges. As my Ltd Scheme was setup 23 years ago, the charges I was paying were very favourable, so don't  want to be losing that.

OP - IN general charges have come down over the years, so I would not assume that a new scheme would have higher charges, maybe the opposite. You need to check.

Because my scheme was setup in 1998, my total charges are only 0.73%.  Sounds crazy but gone in to details lots of times with this and had it confirmed.

Marcon

[Deleted User] said:

Marcon said:

I think you'll find it is, contrary to your moniker, much less complicated than that. As always it depends on the exact rules of the scheme, but the following general points are likely to apply.

1. The provider has already confirmed there are options open to OP under the terms of the EPP in question.
2. Not necessary if the scheme rules provide a solution, as appears to be the case.
7. Where there is no scheme trustee because the company is no longer trading, the company has been dissolved or the scheme trustee is the deceased, the legal personal representative(s) replace the scheme trustee.
8. An EPP is a particular form of DC pension. If OP is the only member, has reached the age where they can access funds, and pays tax where necessary, where's the likelihood of HMRC squawking about unauthorised payments?
9. A director can dissolve their own company, which is what appears to have happened here - and in the process did what so many  do: overlooked something (in this case the pension scheme).

1. Let's hope they are right.
2. Let's hope they are right.
7. You are having a laugh.  A company does not have a personal representative.  
8. 100% likely.
9. Technically, it's the shareholders who pass the resolution but yes, it may well have been overlooked.

1. and 2. So OP says.
7. You said ' I would not want to be the sole trustee of my own pension scheme because if I die ...' I was responding to that. A deceased person has legal personal representatives and they replace the scheme trustee.
8. Nonsense. What form do you think these 'unauthorised payments' would take?
9. The company's directors submit a DS01 form and pay the fee to dissolve a company. You referred to a liquidator when OP has made it clear the company was dissolved.