It's quite surprising how many small organisations get into a mess over pensions.
One charity we work with is closing, and planned to transfer any remaining assets to another charity with similar objectives. But it has just hit a snag.
For many years, the charity's staff have been members of the local authority pension scheme. The staff have received their redundancy pay, and the trustees have contacted the council's pension department.
In the small print, there's the little matter of 'pension strain'. Basically, if the charity wants to leave, it has to pay off the deficit in the fund. In effect, it owes the pension fund about £125,000 that it doesn't have.
In practice, the pension fund will get whatever's left after the charity shuts down and there won't be anything beyond that to transfer to another charity. It might not be so easy for the trustees if the charity was unincorporated. Charity employers have a few options. The first is to not contribute to any pensions at all. But from 2012, new rules will make employer contributions obligatory.
Another is to join the local authority scheme. You need to be wary of schemes where you don't control the amount you have to pay or the costs of leaving the scheme. Or you can contribute a set percentage to employees' own personal pension plans or a stakeholder scheme. These defined-contribution schemes are at least in your control.