How to handle pension scheme share ownership

The trustees of pension schemes will often directly own a company’s shares as part of the overall investment portfolio they hold for the pension scheme.  Accordingly this ownership needs to be reflected in the company’s share register/register of members and any share certificate issued.

Types of pension schemes

There are a number of different types of pension scheme including:

• defined benefit company pension schemes;
• final salary company pension schemes;
• money purchase or defined contribution company pension schemes;
• personal pensions;
• self-invested personal pensions (SIPPs);
• stakeholder pensions.

The trustees of all of these have a duty to invest the pension contributions until they need to pay benefits. The trustees will often appoint third parties to manage and hold the investments, e.g. an investment manager, or will own insurance policies.  However a number will still buy direct investments, including shares, especially the trustees of SIPPs and Small Self-Administered Schemes (SSASs).

Where the shares are not held by the nominee of an investment manager or stockbroker appointed by the trustees the shares and other securities will need to be registered in the name of the trustees.

Should the shareholding be registered in the name of the pension scheme?

No. It is often a misconception that the shares should be registered in the name of the pension scheme.  Most pension schemes are set up under trust. As a trust is not a person it cannot be recorded as the holder of the shares. The shares, as for any other pension investment, are held by the trustees in their names on trust for the beneficiaries of the pension scheme.

To reflect the fact that they are held by the trustees for a pension scheme you can include the name of the pension scheme in the register and on any share certificates as an account designation or part of the address.  Four examples of what could appear in the share register are included at the end of this article reflecting different situations.

Where there is more than one trustee, i.e. it is not a sole corporate trustee, you should include each trustee as a joint shareholder for the pension scheme’s holding.  The trustees can choose not to have all the trustees recorded as the holder of the shares but where they are individuals at least two must be included.

You can, however, only enter one address for the trustees.  This could be the personal address of one of the trustees (see example 2 below) or the address of the scheme administrator if not the trustees (see example 3 below).

Share transfers involving a pension scheme

To reflect a transfer of all or part of a holding by the trustees you will, as for any other transfer, need to receive a fully completed stock/share transfer form J30 for fully paid shares, or form J10 for nil or partly paid shares. Form J30 will need to be signed by all the old trustees. Forms J10 will need to be sign both by all old trustees and all the trustees into whose names the shares are being transferred.

Change of pension scheme trustees

Where the trustees change then you will need to update the share register to reflect the new trustees and issue a new share certificate.  To do this you will need to receive an appropriately completed share transfer form as you would for any other transfer. In addition the appropriate certificate on the back page should be completed and signed by the old trustees to confirm that the transfer is exempt from stamp duty.  If the change is reflecting the death of a trustee then you will need to request a certified copy of the death certificate as well as any share transfer form.

Examples

The following are examples of how to record the ownership: