Data Protection Act 1998
With reference to pensions the Data Protection Act 1998 (DPA 98) affords a scheme member the right to know what data is held about them. There are new provisions of the DPA 1998 with effect from the 24 October 2001 that apply to an employers pension scheme such as a final salary pension, small self administered scheme (SSAS) or contracted in money purchase scheme (CIMPs) and group personal pension or group stakeholder pensions.

The provisions require that the scheme trustees become data controllers and are responsible for access and security of any scheme member personal data that is held on a computer system or in a structured filing system. They are also responsible to make sure that anyone who processes data on their behalf, known as a data processor, provides sufficient guarantees as to the confidentiality and security of data processed.

The scheme trustees must notify the informations commissioner that they are data controllers of their scheme and must tell scheme members the reasons why personal data about them is held and who the data can be passed to.


Income and Corporation Taxes Act 1988
The legislation governing the approval and tax treatment of a personal pension was introduced by the Finance Act 1987 and was later incorporated in chapter IV, part XIV of the Income and Corporation Taxes Act 1988 (ICTA 88). The specific sections for personal pensions are sections 630-655 and that for a retirement annuity are sections 618-629.

For an occupational pension scheme, to benefit from the tax advantages afforded by the Inland Revenue, the employer may establish an approved scheme under section 590 of the ICTA 88, although most opt for an exempt approved scheme issued by the pension schemes office (PSO) due to the extra flexibility of these schemes.

The PSO publishes practice notes that set out the maximum occupational pension scheme benefits and conditions for tax approval and in particular practice notes (IR12 (1997)) that were last re-issued in August 1997. Section 601-602 of the ICTA 88 relates to a defined benefit scheme in surplus where assets exceed liabilities by 5.0% or more and the action appropriate action to be taken by the scheme trustees and employer.


Policyholder Protection Act 1997
The original protection for a policyholder was introduced in the Policyholder Protection Act 1975 (PPA 75) where the policyholder protection board (PPB) acts as an industry funded safety net when a UK insurer becomes insolvent.

The PPA 75 applies in relation to policyholders and others who have been or may be prejudiced as a consequent of an authorised insurance companies inability to carry on business in the United Kingdom and meet certain of their liabilities under policies issued or securities given by them such as an insured personal pension or with profits annuity.

For long term insurance the PPB must initially seek to transfer the ongoing policies of the insolvent insurer to another company or arrange the issue by another insurer of substitute policies and ensure the policyholder will receive 90% of the future benefits. Alternatively, the PPB must pay 90% of the fund value of the policy for the purpose of the liquidation.

Under the Policyholder Protection Act 1997 (PPA 97) a person is eligible for compensation as follows; "a person is a qualifying person if he is a security holder in respect of a security given by the company who is eligible for protection under this section". The provision of the PPA 1997 will be incorporated in the Financial Services Authority (FSA) rulebook for the Financial Ombudsman Service (FOS) to be introduced from the 30 November 2001.


Trustee Act 2000
Updating the statutory powers and duties of trustees contained on the Trustee Act 1925 and the Trustee Investments Act 1961, the Trustee Act 2000 came onto force on 1 February 2000 establishing a new statutory duty of care for trustees when carrying out their duties under trust deed of the Trustee Act.

The Trustee Act 2000 only applies to England and Wales and gives trustees, including pension scheme trustees, wide investment powers for which they must; have regard to the suitability of the investment for the trust and the need for diversification; monitor and review the investments varying the spread where appropriate; and to obtain expert advice on how to diversify or vary the investments of the trusts unless the trustees believe that such expert advice is not necessary. The trustees have a duty to act in the best interest of the beneficiaries and must be diligent to avoid any loss otherwise they may be liable for any breach of their duty.

The trustees must be active at monitoring the trust investments regularly especially where a professional trustees charge for their services as in the case of Nestle vs NatWest Bank. Under section 29 of the Trustee Act 2000, professional trustees can charge for services performed since 1 February 2001 without the need for an expressed professional charging clause in the trust deed. However, these trustees must at all times avoid any conflict between their duty of care to beneficiaries and their personal interests.