7 - The pension scheme in the employment package

Summary

Any contemporary comprehensive analysis of pension scheme governance requires knowledge not only of pensions and trust law, but also an understanding of the treatment of pension schemes in the wider employment law context. At the end of the day, pension schemes are effectively vehicles whereby employers and employees can make provision for the financial needs of employees and their dependants in later life. This is true even in the case of the self-employed, whose pension provision will generally take the form of personal pension schemes. However, this chapter focuses on the employer–employee relationship and its interaction with the trustees of employer-sponsored occupational pension schemes.

Key to understanding the tri-angular relationship between employees (and former employees), their employer and trustees is recognition that accrued pension rights under an occupational pension scheme typically take the form of:

• rights arising under the pension scheme trust that can be enforced by the relevant employee(s) as a beneficiary of the pension trust against its trustees; and

• contractual rights arising under the contract of employment entered into between the employee and employer.