The Pensions Regulator

AbandonmentAbandonment of defined benefit pension schemes

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Interacting with the Pensions Regulator

74. The Pensions Act 2004 gives the regulator a set of specific objectives.
    

    Two objectives relevant to this guidance are to:

    • protect the benefits of members of work-based pension schemes; and
    • reduce the risk of situations arising that may lead to claims for compensation from the Pension Protection Fund.
75. In the light of these objectives, the regulator will consider any arrangement that may result, as set out in our clearance guidance. Queries and applications can be made by email to clearance@thepensionsregulator.gov.uk  
76. The regulator has been granted anti-avoidance powers to meet its objectives. These include the ability to issue:
    • a financial support direction in cases where the employer associated with the scheme is insufficiently resourced; and
    • a contribution notice against a person who was a party to an act (or failure to act), one or the main purpose of which was to prevent the recovery of a s75 debt – or, otherwise than in good faith, to prevent such a debt becoming due, to compromise or otherwise settle such debt or to reduce the amount of such a debt that would otherwise become due.  

    The regulator also has powers to prohibit, suspend and appoint trustees of pension schemes, and to wind up a pension scheme.

77. In the light of this, trustees and employers are expected to report to and consult with the regulator on any arrangement that may result in the abandonment of the pension scheme, at an early stage in the process.
78. Trustees are reminded of other relevant legislation that may require them or the current employer to bring any proposed arrangement to our attention on these subjects. This includes:
    • notifiable events regulations (s69 of the Pensions Act 2004), regulator’s directions (s69(1) of the Pensions Act 2004), codes of practice and guidance; and
    • whistleblowing requirements (s70 of the Pensions Act 2004).
79. Trustees are also directed to our clearance guidance and are expected to examine critically any arrangements that may lead to abandonment where the employer decides not to seek clearance from the regulator.
80. However, it is important for trustees to bear in mind that they need to analyse any proposed arrangement and reach a decision with other parties that is in the members’ best interests. The regulator can act as a referee in any such arrangement, but cannot actively participate in decision-making concerning the proposed arrangement.

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