On this page
- Key points
- Schedule of contributions
- Monitoring contributions
- Resolving late payments
- Advising on employer matters
- Detailed guidance
- Advise trustees to review the schedule of contributions regularly and revise it when necessary.
- Advise trustees to check together with their administrators that contributions are paid into defined benefit (DB) schemes according to the schedule of contributions.
- Make sure that trustees contact employers promptly to alert them about a payment failure and to try and resolve it.
- Advise trustees to report material late payments to us and/or consider whether to make a report yourself.
- Advise employers on paying the correct contributions and when to pass information to trustees.
Schedule of contributions
Trustees must produce a schedule showing the rates of contributions payable to the scheme by or on behalf of the employer and scheme members who are accruing benefits, and the dates by which those contributions are payable.
You should advise trustees to review the schedule regularly and revise it when necessary. The scheme actuary must certify the schedule.
When you advise on the content of a schedule of contributions, you should advise the trustees to ensure that it:
- is clear enough to enable trustees to monitor payments
- is drafted to avoid, as far as possible, the need to refer to other scheme documents
- doesn’t show any due date for member contributions later than the 22nd day of the month following deduction from pay (or the 19th day if payments aren’t made electronically)
- avoids referring to the contributions covering individual augmentations or general benefit improvements, unless these were planned and due to be paid when the schedule of contributions was certified
Schedules may contain contributions to repair a funding deficit as an additional percentage of pensionable pay.
You should advise trustees to check that contributions are paid into the scheme according to the schedule of contributions and to have procedures for checking contributions are paid, including reconciling them with the schedule of contributions.
Good record-keeping and adequate internal controls ensure that the scheme and the schedule of contributions are administered, maintained and managed according to the scheme rules and legal requirements. You should advise trustees to record and keep information on transactions.
Resolving late payments
Where a payment failure occurs, you or the trustees should have an agreed process for liaising with the employer promptly to alert them about the failure and to try and resolve it. You may need to assist the trustees to find out and record the causes and circumstances of the payment failure. You should help trustees to ensure there’s a process for obtaining overdue payments and correcting administrative errors.
You or the trustees need to report a material late payment to us, usually within 10 working days of having reasonable cause to believe that it exists. You should advise the trustees to report to us using our online service Exchange.
Where there is a current or imminent danger to the payments if immediate preventative action isn’t taken, you should advise the trustees to report the failure to us by telephone as soon as you become aware of it.
The trustees must report the material late payment to members within 30 days of it being reported to us.
Circumstances which are likely to be material and which should be reported to us include where:
- there’s reasonable cause to believe that the employer isn’t willing or able to pay the outstanding contributions
- the reminder and recovery process has been completed without obtaining the outstanding payment
- there is possible dishonesty or misuse of assets or contributions
- the trustees become aware that the employer doesn’t have adequate procedures or systems in place to ensure the correct and timely payment of contributions, and the employer doesn’t appear to be taking adequate steps to remedy the situation
- there is an immediate risk to members’ benefits
- contributions have been outstanding for 90 days from the due date, unless it’s an infrequent administrative error that’s already corrected or will be as soon as reasonably practicable
Advising on employer matters
An employer must contribute in line with the schedule of contributions for their scheme. If you advise an employer you are likely to need to make sure they are aware of this responsibility and the need to have systems in place to ensure contributions are paid appropriately.
You should also ensure that the employer understands when they need to pass information to the trustees so that they are aware of changes affecting the contributions due to be paid.
Guidance for DB trustees on making sure that the correct contributions are paid into schemes