Canada Life has warned intermediaries and group life scheme trustees to be aware of the impending deadline affecting the operation of these policies.
The deadline relates to registered stand-alone schemes established before 6 April 2006 (A-day) to ensure they meet the requirements of the Finance Act 2004.
The Act required Trustees of these schemes to update the ways in which their scheme operated and provided a 5-year transitional period, in which to do so.
That period ends on 5 April 2011.
As the provider explains : "By then, Trustees, supported by their benefits advisers, should have reviewed their scheme to ensure there are no:
• unintended benefit increases for scheme members;
• unauthorised payments; or
• un-insured liabilities.
"For example, from 5 April, the ‘earnings cap' will no longer apply. This could mean that unless specific action has been taken to apply a restriction to members' salaries, their benefits would increase, whether the Trustees had intended this or not."
In response, Canada Life has produced a dedicated webpage including specimen deeds of amendment that amend the provisions of declarations of trust for affected schemes and a webcast about the changes.
Howard Rayner, group legislation manager at Canada Life, added: "This is an important deadline for Trustees of these schemes and they need to review the way in which their scheme operates, to avoid unintended consequences.
"If they need clarification over the documentation used to establish their scheme, we recommend they seek independent legal advice. Meanwhile, we have tried to make it as easy as possible for Trustees, by highlighting the issues and the impending deadline that they face."
