Data Protection Act 1998
With reference to pensions the Data Protection Act 1998 (DPA
98) affords a scheme member the right to know what data
is held about them. There are new provisions of the DPA 1998
with effect from the 24 October 2001 that apply to an employers
pension scheme such as a final
salary pension, small self administered scheme (SSAS) or
contracted in money purchase scheme (CIMPs)
and group personal pension or group stakeholder pensions.
The provisions require that the scheme trustees
become data controllers and are responsible for access and
security of any scheme
member personal data that is held on a computer system
or in a structured filing system. They are also responsible
to make sure that anyone who processes data on their behalf,
known as a data processor, provides sufficient guarantees
as to the confidentiality and security of data processed.
The scheme trustees must notify the informations
commissioner that they are data controllers of their scheme
and must tell scheme members the reasons why personal data
about them is held and who the data can be passed to.
Income and Corporation Taxes Act 1988
The legislation governing the approval and tax treatment of
a personal pension was introduced by the Finance Act 1987
and was later incorporated in chapter IV, part XIV of the
Income and Corporation Taxes Act 1988 (ICTA
88). The specific sections for personal pensions are sections
630-655 and that for a retirement annuity are sections 618-629.
For an occupational pension scheme, to benefit
from the tax advantages afforded by the Inland Revenue, the
employer may establish an approved
scheme under section 590 of the ICTA 88, although most
opt for an exempt approved scheme issued by the pension schemes
office (PSO)
due to the extra flexibility of these schemes.
The PSO publishes practice notes that set
out the maximum occupational
pension scheme benefits and conditions for tax approval
and in particular practice notes (IR12 (1997)) that were last
re-issued in August 1997. Section 601-602 of the ICTA 88 relates
to a defined
benefit scheme in surplus where assets exceed liabilities
by 5.0% or more and the action appropriate action to be taken
by the scheme trustees and employer.
Policholder Protection Act 1997
The original protection for a policyholder was introduced
in the Policyholder Protection Act 1975 (PPA 75) where the
policyholder protection board (PPB) acts as an industry funded
safety net when a UK insurer becomes insolvent.
The PPA 75 applies in relation to policyholders
and others who have been or may be prejudiced as a consequent
of an authorised insurance companies inability to carry on
business in the United Kingdom and meet certain of their liabilities
under policies issued or securities given by them such as
an insured personal
pension or with profits annuity.
For long term insurance the PPB must initially seek to transfer
the ongoing policies of the insolvent insurer to another company
or arrange the issue by another insurer of substitute policies
and ensure the policyholder will receive 90% of the future
benefits. Alternatively, the PPB must pay 90% of the fund
value of the policy for the purpose of the liquidation.
Under the Policyholder Protection Act 1997
(PPA 97)
a person is eligible for compensation as follows; "a
person is a qualifying person if he is a security holder in
respect of a security given by the company who is eligible
for protection under this section". The provision of
the PPA 1997 will be incorporated in the Financial
Services Authority (FSA) rulebook for the Financial Ombudsman
Service (FOS) to be introduced from the 30 November 2001.
Trustee Act 2000
Updating the statutory powers and duties of trustees contained
on the Trustee Act 1925 and the Trustee Investments Act 1961,
the Trustee
Act 2000 came onto force on 1 February 2000 establishing
a new statutory duty of care for trustees when carrying out
their duties under trust deed of the Trustee Act.
The Trustee Act 2000 only applies to England
and Wales and gives trustees, including pension scheme
trustees, wide investment powers for which they must;
have regard to the suitability of the investment for the trust
and the need for diversification; monitor and review the investments
varying the spread where appropriate; and to obtain expert
advice on how to diversify or vary the investments of the
trusts unless the trustees believe that such expert advice
is not necessary. The trustees have a duty to act in the best
interest of the beneficiaries and must be diligent to avoid
any loss otherwise they may be liable for any breach of their
duty.
The trustees must be active at monitoring
the trust investments regularly especially where a professional
trustees charge for their services as in the case of Nestle
vs NatWest Bank. Under section 29 of the Trustee Act 2000,
professional trustees can charge for services performed since
1 February 2001 without the need for an expressed professional
charging clause in the trust deed. However, these trustees
must at all times avoid any conflict between their duty of
care to beneficiaries and their personal interests.
|
