Pensions Considerations For Students' Unions

• Published date: 05 December 2021
• Subject Matter: Employment and HR, Retirement, Superannuation & Pensions
• Law Firm: Wrigleys Solicitors
• Author: Mr Michael Wilcock and Wills Crump

While SUs have a variety of more pressing matters to consider, pensions are often the largest liability a SU carries.

Why should SUs care about pensions?

Pensions are not typically at the top of many Students' Unions (SUs) agendas; we understand there are a variety of pressing issues SUs have to deal with and, like many other employers, pensions naturally take a backseat.

However, pensions often represent one of the largest liabilities on an SU's balance sheet and managing these liabilities is a key responsibility for SU Trustees.

In this article, we consider some of the main pensions issues SUs face including:

• Managing Students' Union Superannuation Scheme (SUSS) liabilities
• Managing liabilities of other defined benefit pension schemes the SU participates in
• Auto-enrolment

What are defined benefit schemes?

Most employers are familiar with the requirement to auto-enrol certain employees into a suitable pension scheme. However, SUs often have additional pension obligations due to the unique way in which they are structured, including participation in defined benefit (DB) schemes.

A common example of a DB scheme is the SUSS. Additionally, it is not unknown for SUs to employ members of the relevant university's DB Scheme and, occasionally, public sector schemes (like the Local Government Pension Scheme).

DB schemes are typically more generous than DC schemes as they provide the employee a guaranteed level of income in retirement, with employers often having to fund former employees' benefits long after they leave or retire. DB schemes are also more highly regulated under both legislation and by the Pensions Regulator (TPR).

SUs are not exempt from pensions legislation governing DB schemes by virtue of their not-for-profit status (or otherwise), and must comply with these provisions in addition to their obligations under the Charities Act 2006, the Companies Act 2006, and the Education Act 1994. The main time compliance becomes an issue for SUs is on incorporation. As discussed below, pensions legislation can lead to significant liabilities being inadvertently triggered on incorporation.

Pensions issues on incorporation for SUs

Many SUs choose to incorporate as a separate legal entity, because it offers more protection from personal liability for trustees, as well as simplifying administration. To see an outline of the potential benefits for SUs of incorporating, please read our article here.

The key pensions issue for SUs on incorporation is inadvertently...