RPSM07105020 - Technical Pages: Investments: Equities: Limits
Limits on shares in sponsoring employer companies
| [s180(5)] |
There are restrictions on the amounts in which a
registered pension scheme may invest in shares of
a sponsoring employer.
A registered pension scheme may acquire shares in a
sponsoring employer providing that at the time the payment is made
the
market value of the shares is less than 5% of the
total of the cash sums and the market value of the net assets held
for the purpose of the pension scheme.
The scheme may acquire shares of more than one sponsoring
employer of the scheme providing that at the time the payment is
made the market value of the shares is less than 20% of the total
of the sums and the market value of the assets held for the purpose
of the pension scheme. The shares in any one sponsoring employer of
the scheme should be less than 5%.
The market value is tested at the time the payment is made
for the shares and will not be re- tested at a later date, if for
example the scheme assets lose their value, unless new shares in
the sponsoring employer are acquired.
There are no restrictions with regard to the percentage of
shares which can be held in one company (for example a registered
pension scheme could potentially own 100% of the share capital of a
company) providing that the sums invested are less than 5% of the
fund value mentioned above.
Where the above 5% or 20% limits are exceeded, the amount
will be subject to an unauthorised payments charge on the employer
(see
RPSM07108010). The scheme will also
be subject to a scheme sanction charge (see
RPSM07108030).
| Glossary ( RPSM20000000) |
