The Pensions Regulator

Code of practice 01
Reporting breaches of the law

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The duty to report

25. The requirement to report breaches of the law arises when a duty which is:
    • imposed by or by virtue of an enactment or rule of law; and
    • relevant to the administration of a scheme
    has not been or is not being complied with.

    View related guidance.

26. Not every breach has to be reported. The judgements required in order to reach a decision to report are outlined below.

    'Imposed by or by virtue of an enactment or rule of law'

27. 'Enactment' covers Acts of Parliament and regulations or statutory instruments. For example, the Pensions Act 2004 is an enactment as are regulations made under that Act. Breaches of criminal law, such as an offence of dishonesty under the Theft Act, would also come within the term enactment.
28. 'Rule of law' covers law laid down by decisions of the courts. It would, for example, include trust law and common law.
29. When considering breaches of trust law, reporters should bear in mind the basic principle that trustees are holding property on behalf of others. Trustees should act in good faith and within the terms of their trust deed and rules for the benefit of all of the beneficiaries of the scheme. If they fail to do so, they are in breach of trust law. A very basic rule of thumb in considering whether an action or failure to act is, or may be, a breach of trust is this: if the trustees have acted in a way which would appear unfair or wrong to a reasonable and objective person, then a breach of trust may have taken place.

    View related guidance.

    'Relevant to the administration of the scheme'

30. In view of its statutory objectives, the Pensions Regulator interprets 'administration' widely in the context of the need to report breaches. It is much wider than just those tasks normally associated with the administrative function such as keeping records, dealing with membership movements, calculating benefits and preparing accounts, though all these are included within it. The Pensions Regulator interprets administration to include such matters as the consideration of funding in defined benefit schemes, investment policy and investment management, as well as the custody of invested assets; indeed anything which could potentially affect members' benefits or the ability of members and others to access information to which they are entitled.

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