Received a Letter About Your Company Pension and IORPS II? Here’s What It Means
If you are a company director, you may have received paperwork recently from your pension provider asking you to engage about transferring your existing company pension to a new pension structure.
This is not optional. The communication relates to new pension legislation known as IORPS II, which came into force in April this year and applies to many existing company pension arrangements.
What is IORPS II and why does it matter?
IORPS II is new pension legislation that changes how certain company pension schemes must be structured and governed.
If your existing company pension does not meet the new requirements, it is now non-compliant. Pension providers are required to notify members and ask them to take action. If you have not responded yet, you should be aware of one key point.
As things stand, you are currently in breach of the new pension regulations.
That does not mean penalties are automatic, but it does mean the issue needs to be addressed as soon as possible.
What happens if you have not taken action yet?
You still have choices.
While you are required to move to a compliant structure, you retain control over which type of new pension arrangement your existing company pension is transferred into.
The decision you make now matters, not just for compliance, but for future flexibility, access options, and how your pension is treated when you die.
Your three main options
In broad terms, company directors generally have three compliant routes available:
- A Master Trust
- A Personal Retirement Bond (PRB)
- A PRSA
Each option satisfies the IORPS II requirements, but they differ in meaningful ways.
Why the choice matters
While all three structures are compliant, they do not offer the same outcomes when it comes to:
- Inheritance treatment if you die before accessing the pension
- Tax treatment for your beneficiaries
- Flexibility around early access, including circumstances where access may be needed before age 60
For example, some options are more restrictive for inheritance planning, while others may provide more flexibility depending on your personal and family circumstances.
Choosing the wrong structure could lead to unnecessary tax exposure or reduced options later on.
This is not a box‑ticking exercise
Many directors assume this is an administrative change and let the default option happen.
That is a mistake.
The IORPS II transition is one of the few moments where you are required to review your pension structure but also given the opportunity to improve outcomes if the right decision is made.
Once the transfer is completed, reversing it can be difficult or impractical.
What to do next
If you have not yet made a decision, the next step is to:
- Review which pension structures are available to you
- Understand the implications for inheritance and access
- Choose the option that aligns with your wider tax and retirement plans
If you would like help assessing your options, we can talk you through the advantages and disadvantages of each structure and how they apply in your situation.
A short, no‑obligation conversation is often enough to clarify the right approach.
If useful, you can get in touch and we will guide you through the choices.
