Pensions

What’s it all about?

Occupational pension schemes are provided by employers for the benefit of their employees. They are set up under trust, which means that a group of individuals known as trustees have responsibility for overseeing the management of the pension scheme for the benefit of the scheme’s members. Each pension scheme is governed by a set of rules, known as a “Trust Deed and Rules”, and it is within the parameters of these rules that trustees are able to operate the scheme.

Trustees are also required to comply with numerous pieces of legislation and associated regulations, and must have adequate understanding of current pensions issues.

Pensions lawyers are there to provide advice to the trustees or the employer on the running of pension schemes.

The working culture

There are many facets to working in pensions. More often than not, pensions lawyers will give advice to trustees on day-to-day issues that arise, such as the distribution of funds upon the death of a member, or deciding whether to let a particular member join the scheme. Trustees have quarterly meetings throughout the year and pensions lawyers are often asked to attend these to provide any legal advice that may be required. Pensions lawyers will also be in regular contact with actuaries and investment consultants that their clients work with.

Pensions lawyers can also find themselves at the heart of a corporate transaction, which means fast-paced work, longer hours, and great satisfaction once the deal is signed. On top of these things, it is important that pensions lawyers are up to date on the most recent developments in the pensions industry and are therefore able to inform clients and take any necessary action in an efficient and effective manner.

What other practice areas do pensions lawyers work most closely with?

Pensions lawyers often work closely with a number of other practice areas. When a corporate transaction is hot on the go, pensions lawyers will work closely with the corporate department to ensure the pension aspects of the deal are executed properly. Pensions and employment tend to overlap and so these teams will often work closely together, particularly if a transfer of employees between companies arises.

Pension funds grow by being invested. Investment Management Agreements will be set up between trustees and their investment managers, setting out the terms and conditions applying to the management of the pension scheme’s assets. Financial services lawyers will be involved in reviewing these agreements, and any other investment documentation relating to pension schemes.

As well as working closely with other teams, pensions lawyers will provide standalone pensions advice to their clients on a regular basis.

What phrase is a pensions lawyer most likely to use and what does it mean?

Contributions. Broadly speaking there are two occupational pension scheme structures: Defined benefit (or final salary) and defined contribution (or money purchase).

In a defined contribution scheme, contributions are simply what the member and employer pay into a pot, which will hopefully grow from investment in various funds and eventually purchase an annuity for the member on retirement. All risk lies with the member and the employer is under no obligation to “top up” the fund if it underperforms.

Contributions in a defined benefit scheme are far more complex. In a defined benefit scheme members hope to receive a percentage of their final salary as their annual pension on retirement. The risk for providing this pension lies with the employer, and so the employer must ensure that the scheme is fully funded, which can be tricky as funds can fluctuate from time to time depending on market conditions.

Skills required

Pensions is a highly technical area of law, so pensions lawyers need to have a good grasp of how to handle black-letter law. If you enjoy interpreting and applying statutes, then pensions is probably right up your street.

Strong analytical skills, technical expertise, and acute attention to detail are key to becoming an excellent pensions lawyer. Equally important are good interpersonal and communication skills as, in any area of law, pensions lawyers will build up their own client base. Pensions clients tend to be personable as a rule, so it helps to be confident in relating with clients both face-to-face and over the phone.

By Miranda Wray, associate, CMS Cameron McKenna