Who Really Pulls Your Strings? How New PSC Requirements Affect Trustees
For those UK pension trustee boards out there who are incorporated (i.e. as a trustee company), from 6 April 2016 there will be a new requirement to keep a register of your “persons with significant control” (PSC). In addition, from 30 June 2016 this information will need to be delivered to Companies House where it will be made publicly available.
As trustee directors you should make sure that whoever handles your statutory books and filings is aware of the new requirements and puts procedures in place to ensure they are complied with. It is worth noting that failure to maintain a PSC register will be a criminal offence.
Some of the key points from a pensions perspective are:
If you have a trustee company limited by shares, your PSC is likely to be your immediate parent company (typically a participating employer of the pension plan or another company in the group), although certain other individuals/entities could also be caught. If you have a trustee company limited by guarantee, it may be more tricky to identify your PSC as there is no “shareholding” as such. In either case, an analysis should be undertaken of the company’s constitution to understand who has control of the company in practice (in particular, who has the power to appoint and remove the majority of trustee directors).
If you are a trustee company whose PSC is an employer of the pension plan or another group company, you may view the new requirements as simply a matter of compliance. Indeed, there may be compelling reasons to maintain the status quo (such as the ability of the trustee to recover VAT paid to third party suppliers where the trustee company sits within the employer’s group). However, some trustee directors may be uncomfortable stating publicly that they are “controlled” by the employer’s group as this seems at odds with the fiduciary nature of a pension trustee. In these cases, it may be possible to move to alternative structures such as a company limited by guarantee where the trustee directors are the members. However, this would need to be structured carefully to avoid the employer still being regarded as a PSC. For example, factors such as who has the ability to appoint and remove trustee directors, as well as the ratio of member-nominated to employer-nominated trustee directors, will likely have an impact.
Trustees considering potential moral hazard proceedings via the Pensions Regulator may find it easier to identify potential targets for regulatory action as companies within the employer’s group will have to identify their own PSC.