The scheme order is theequivalent to a conventional trust-based pension scheme’s deed and outlines its eligibility criteria.
It is a statutory instrument and has to be approved by parliament.
The scheme rules will be initially drafted by the government and will detail how particular issues, such as transfers, will be carried out.
It can be amended by the scheme’s trustees.
The consultation proposes the scheme will use electronic signatures to verify documents.
“This is a step into a new area for occupational pension schemes,” said Anne-Marie Winton, partner at Nabarro.
“I would expect generic advice to be made available to employers in due course to confirm that this is a valid way of executing a formal trust document.”
It also proposes that the trustees will pay death benefits to the person nominated on a member’s expression of wish form.
Winton added: “This means that the payment would potentially be liable for inheritance tax as it is being paid as of right, rather than by virtue of the trustee exercising a discretion.
“After the recent Budget, this looks like another loss of favourable tax treatment in connection with pensions saving – albeit by the back door.”
