Occupational Pension Schemes
Structure and roles
The trustee holds scheme assets, sets the Statement of Investment Policy Principles (SIPPs) and Statement of Funding Principles, and owes fiduciary duties to members. The employer funds the scheme (DB) or contributes (DC). The administrator and actuary support governance. Understand the difference between one-member arrangements, small self-administered schemes, and master trusts.
DB versus DC
DB promises a benefit formula (often final salary or career average). DC provides a fund with investment risk borne by the member. Know the preserved benefit rules, vesting, and normal retirement age conventions.
Governance and disclosure
Know the Trustee Regulations, the role of member-nominated trustees, the annual benefit statement, scheme annual report, and the Pensions Authority's codes of practice. IORP II requires key functions (internal audit, risk management, actuarial, compliance) and an own-risk assessment.
Traps
- Assuming the employer is the trustee - usually distinct, and the trustee cannot simply follow employer instructions.
- Confusing preserved benefit (statutory) with discretionary augmentation.
- Treating the SIPP as an investment product - it is a governance document.
- Forgetting that member-nominated trustees are a statutory right in many schemes.
Rule of thumb
Map every scenario to who bears the risk - if the employer bears investment and longevity risk, it is DB; if the member does, it is DC.