Employees are entitled to written information on the terms and conditions relating to their pension when they first start work, and must be notified promptly of any changes to those terms (documenting the contract), (documenting change). In addition, the trustees or managers of a pension scheme must provide certain information about the scheme and the benefits paid under it, under the Occupational Pension Schemes (Disclosure of Information) Regulations 1996. The way in which information is provided may need to be modified for disabled employees, under the duty to make reasonable adjustments ( discrimination in pensions ).
The Disclosure if Inforamtion Regulations are very detailed, and employers who wish to check that their requirements are being met would be well advised to obtain a copy of them or to contact their Association for advice. The Regulations apply in full to tax approved schemes (taxation); there are more limited obligations on schemes that are not tax approved.
Much of the information covered by the Regulations must be given not only to members and prospective members of the scheme but also to their spouses, other beneficiaries under the scheme, and independent trade unions that are recognised for collective bargaining purposes in relation to members and prospective members of the scheme. In some cases, the information must be provided free. In other cases, a charge may be made for furnishing a copy of a document, but this must not exceed the expenses incurred in providing it.
The key points to observe when providing information on pensions are as follows:
- On request, the trustees and managers must disclose the contents of the trust deed or other document that set up the scheme, and the scheme rules.
- Certain basic information about the scheme must be given automatically to prospective members either before they join or, if that is not practicable, within two months of them joining. This information must also be made available on request to members or prospective members and their spouses, other beneficiaries and independent recognised trade unions. This basic information includes:
- eligibility conditions;
- how contributions are calculated;
- what arrangements there are for making additional voluntary contributions;
- what the normal pension age is; and
- what benefits are payable under the scheme.
Alterations to some of these details must be notified to members and beneficiaries before the change takes effect or, if that is not practicable, within three months of the change.
- Individuals are entitled to information on their own benefit entitlement in certain circumstances. For example, a statement of entitlement must be given when benefits become payable because a member has retired or died; those who are members of money purchase schemes are entitled to an annual statement of contributions and benefits and an anuual illustration of the pension benefits that are likely to be payable to them under the scheme; and final salary scheme members are entitled to request information on their entitlement once a year. (It is advisable for employers to issue an annual benefit statement to all employees. This should reduce the number of requests by individuals for information about their entitlements, and may also reveal inaccuracies in information that is being held.)
- A copy of the scheme's annual report and audited accounts must be made available on request, as must actuarial valuations and the scheme's statement of investment principles.
Employers and pension scheme trustees and managers are all bound by the requirements of the data protection legislation when they obtain, hold and pass on personal information for the purpose of administering pensions (data protection ). Employers, trustees and managers are all data controllers, and so each is under a duty to notify the Information Commissioner that it is processing personal data.
The Data Protection Code (code of practice ) advises employers to ensure that they do not use personal information about an employee for general employment purposes, if it was provided for use by the pension scheme administrator or trustees. Exchange of personal information between the employer and the scheme provider should be limited to the minimum necessary for the effective operation of the scheme.
Given the legal requirement to provide information about pension schemes and the complexities of pension benefits, it is important for companies to provide well-presented, clear information about their pension scheme. Employers should check that the information they provide on their scheme, and the way in which it is provided, meets the requirements of the Disclosure of Information Regulations.
Employers may wish to consider producing a booklet that explains their pension scheme and the benefits of joining it. The contents of the booklet need to be easy to understand, so technical jargon is best avoided. It is also important to ensure that the booklet is kept up to date. If properly drafted, a booklet can meet the requirements of the Disclosure of Information Regulations.
It is advisable for employers to develop a procedure for dealing with requests for information by individuals and recognised trade unions. This could:
- identify the person to whom a request for information should be made;
- state how quickly requests will be responded to;
- set out any charges that will be made for the provision of copy documents;
- explain how disputes over entitlement to information will be dealt with; and
- establish arrangements for recording requests for information. (This is especially important for companies that operate from various sites.)
Companies that operate from various sites may find it convenient to have copies of the documents that may need to be disclosed at each site. If more than one union is recognised for a particular class of employees, it may be useful to agree that one representative should act on behalf of them all.