The code of practice on trustee knowledge and understanding (TKU) is one of four sets of guidance to have come into effect from the Pensions Regulator.
It aims to set out practical guidance for trustees on how they can comply with the new requirements of the Pensions Act which came into force in April and ask trustees to be “conversant with their scheme documents”.
The code also requires trustees to have “appropriate knowledge and understanding of trusts and pension law and of the principles of funding and investment”. Existing pension scheme trustees will now have six months in which to reach the relevant level of TKU, while new trustees will have six months from the date of their appointment.
Although the codes are not statements of law, they do have a legal status and have to be taken into consideration by a court or tribunal if they are relevant to what is being decided.
In addition, the Regulator has also published codes of practice on:
- Early leavers: reasonable periods
- Reporting of late payments to occupational money purchase schemes
- Reporting of late payments to personal pensions
The early Leavers code of practice outlines the rights for members leaving occupational pension schemes early, with more than three months but less than two years service, and without vested rights to benefits, to receive a cash transfer lump sum or a refund of their contributions.
Relating to new provisions introduced in April 2006, the code also explains the duties of trustees and pension scheme managers to notify members of their rights, and how best to help them facilitate their chosen option.
And although the regulations relating to the reporting of late payments of contributions have also been in effect since April, the new codes provide trustees with guidelines on reporting to the Regulator and to members.
The codes also include examples of when late payments should and should not be reported in an attempt to clarify the obligations of trustees and pension scheme managers and to describe what kind of delay is likely to be of “material significance”.
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Nyree Stewart on 020 7968 4558 or email [email protected]IFAonline
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